It is easy for anyone to fall deep into financial debt. But getting out of debt is not quite that simple. Whether you have high balances on your credit cards, student loans or you are unable to make mortgage and car payments, it is a problem facing countless people throughout Salt Lake City. One of the most popular solutions is debt consolidation. However, that is not always the case. Depending on your financial situation, debt consolidation could be a huge mistake. Before you decide to start the process, here are some important factors to take into consideration.
What is Debt Consolidation?
Debt consolidation is a form of refinancing that involves taking out one loan to pay off several others. In theory, simplifying payments should make the process of getting out debt easier. But when it comes to overcoming massive debt, nothing is simple. Many people enter into debt consolidation because they believe they are saving on interest and making a small payment. The answer is yes and no. While debt consolidation can help wipe out debt and help people start again with a clean slate, success depends on the responsibility of the consumer.
There are two types of people who fall into debt. There are those who have been the victim of problems they couldn’t control—the loss of a job, a divorce or massive medical bills and expenses. Then there is another group of people who spend their money recklessly without taking into consideration the consequences of their actions. If you fall into the second group, debt consolidation will not help. Although it may initially eliminate consumer debt, it does not stop an irresponsible behavior. Those who make no attempt to change their spending habits are doomed to find themselves back in the same position.
How to Make Debt Consolidation Work
Debt consolidation can be a very good strategy. But making it work takes some initiative. First, have a plan. For example, life can sometimes get unpredictable. It is important to save a percentage of your income to account for unexpected expenses, such as a medical emergency, a death in the family or the loss of a job. Debt consolidation allows for lower interest rates on parts of the debt resulting in lower payments. But beware! The lower payments are usually the due the extension of the term rather than less debt. Do the math and you will notice the longer a person stays in debt, the lower the payment.
Have You Fallen into Deep Consumer Debt? A Salt Lake City Bankruptcy Attorney Can Help
If you are struggling with overwhelming debt in Utah, it may be time to consider filing for bankruptcy. Over the years, Salt Lake City bankruptcy attorney Justin M. Myers has helped many men and women resolve their consumer debt allowing them to regain their financial freedom. He and the legal team utilize a personable and comprehensive approach to help clients find the best solutions. Whether you are looking to file for Chapter 7 or Chapter 13 bankruptcy, contact his Salt Lake City law office today and schedule a free consultation to discuss your case.