New York Debt Consolidation
Even the most fiscally responsible people sometimes find themselves deep in debt and unable to pay their bills on time. A serious illness, loss of job, divorce or death could send a family into financial instability. Unfortunately, creditors are not concerned about the causes of your financial struggles. They want you to pay the debt on time. If you fall behind creditors will call you and demand payment. If you still do not pay, some creditors will go to extreme measures to collect the debt including going to court and getting a judgment against you. A judgment is serious as it will allow the creditor to seek a wage garnishment. Even if your financial situation seems dire, there are strategies that could result in your debt payments being lowered so that they are more manageable or result in some or all of your debt being eliminated. One such strategy is debt consolidation. With debt consolidation, you take out a single loan and use it to pay off all of your smaller debts. For a debt consolidation plan to work the new loan must have terms that will result in your single monthly payment being lower than the total monthly payments of the individual loans and credit accounts that you use the debt consolidation loan to pay off. If you cannot afford to pay your bills it is critical that you immediately contact an experienced New York Debt Consolidation Lawyer who will review the specifics of your financial situation and explain to you your options for debt consolidation.Types of debt consolidation loans
A debt consolidation loan can be either a secured loan or an unsecured loan. A secured loan is one for which you put up some sort of collateral to ensure that the creditor will receive payment. For example a mortgage is a secured loan. Similarly, a car loan is a secured loan. If you fail to repay a secured loan, the creditor could repossess the property. In the case of a mortgage, if you do not pay you will face foreclosure. On the other hand an unsecured loan is one that is not secured by property. Credit cards and personal loans are examples of unsecured loans.Using an unsecured loan for debt consolidation
If you get an unsecured loan for debt consolidation, you will not put any property at risk since such a loan would not require collateral. However, you must have pretty good credit to get an unsecured loan. Thus, you would have to plan in advance, anticipating that you will soon have difficulties paying your debt. Once you get behind in you debt payments you credit rating will be negatively impacted and few lenders will be willing to offer you a loan with favorable terms. If you take out a debt consolidation loan with a high interest rate, while you may still be able to pay off your other debt, you will end up struggling to make the monthly payments required by the debt consolidation loan.Using a secured loan for debt consolidation
A secured loan may be your only option if your credit score has been damaged due to recent late payments. In addition to being easier to qualify for, secured loans often have lower interest rates. On the other hand, a disadvantage of a secured loan is that you will have to pledge an asset as collateral. This means that if you default you could lose the property that was used as collateral.
Other options. If you are having problems paying your bills, there are other options for debt relief. The option that is best for you will depend on factors such as the amount of debt, how late you are in payments, your resources, and the steps your creditors have already taken to secure payment. Such options include filing for chapter 7 bankruptcy, filing for chapter 13 bankruptcy, or negotiating a debt settlement.
If you are facing financial problems, you should contact an experienced attorney right away. The longer you wait the fewer options you will have. The staff at Stephen Bilkis & Associates, PLLC has extensive experience helping clients avoid garnishments, eliminate debt, respond to creditors' claims, file for chapter 7 or chapter 13 bankruptcy, and deal with other issues related to debt relief. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your debt issues.