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Is Debt Consolidation in NYC Right for You. When struggling to get out of debt it is important to know about all your options. One of the most commonly talked about debt solutions is known as debt consolidation. Many companies push this option strongly, but is it really effective, and is it the right option for you. For those struggling with debt in NYC, it is a good idea to learn exactly what debt consolidation is so you can decide if it is an option you should consider.
What is Debt Consolidation. To put it simply, debt consolidation is getting a new loan that is used to pay off all your other debts. So, if you owe $5000 on ten different credit cards, auto loans, or other debts, you would get one consolidation loan for $50,000 and pay them all off. This would allow you to make just one payment each month rather than ten. It is important to note, however, that this process doesn’t actually reduce your debt in any way. You still owe the same amount of money (and sometimes more, if the loan was for more than the total amount owed).
So rather than being a real debt solution, debt consolidation is more focused on convenience. For some people, having one monthly payment each month rather than multiple is going to make life easier, and in that case, it can make sense. For those who are struggling to get out of debt, however, this option isn’t going to help you make progress. Another thing to take note of is that in many cases, the debt consolidation loan will have a higher interest rate than the average rate you are currently paying. If that is the case, your total expenses each month will actually be higher than it would be if you were paying each debt separately.
Is Debt Consolidation in NYC Right for You. If you are looking for a way to get out of debt as quickly as possible, debt consolidation isn’t likely the best course of action. Instead, consider an option like a Chapter 7 bankruptcy. While bankruptcies are often thought of as a negative thing, the reality is they are often the best solution, and nothing to be ashamed of. This is a legal option designed to help people to actually eliminate the principal balances on their debts, not just shift them around. In the vast majority of cases, a Chapter 7 Bankruptcy will get you on strong financial footing much more quickly than a debt consolidation loan ever could.
