Although filing for bankruptcy is one of the most practical solutions for resolving debt-related issues, it may not be right for everyone. For this reason, it may be a good idea to explore some of the alternative options that are available to you—including debt consolidation. This route may be beneficial for those who have accrued debt on several different credit cards. Our Chicago bankruptcy attorney can help determine if debt consolidation is right for you!
Debt consolidation can provide benefits such as:
If you are interested in consolidating your debt, you would need to take out a loan that would subsequently be used to pay off others. This can be done to merge a number of unsecured loans into one larger unsecured loan, but it most commonly involves using collateral against a secured loan.
For example, a mortgage would be secured against the tangible asset of your house. You may be able to secure a lower interest rate, as it would essentially act as a promise to pay back the loan—with the penalty being the forced foreclosure of your home. Since the risk to the lender would subsequently be reduced by involving collateral, they would be more apt to offer a lower interest rate.
In some cases, the company handling your debt consolidation can even offer you a discount on the amount of the loan.
The process of debt consolidation could be implemented under a number of circumstances, but it is most commonly used to pay back large amounts of credit card debt. Since credit cards usually carry high interest rates, debt consolidation would allow the debtor to pay back the money that they owe at a lower rate.
When using valuable assets as collateral, such as a car or a home, it would be easier to obtain a secured loan. This, in turn, would allow the individual to pay off the loan more quickly—thus incurring less interest over that period of time. Although this may be a beneficial debt relief solution for some, it should only be implemented under certain circumstances. You should discuss your case with a Chicago bankruptcy attorney before taking any such action.
Under certain circumstances, it may be recommended that you undergo a federal student loan consolidation. Your existing loans would be purchased by the Department of Education through the Federal Direct Student Loan Program, subsequently allowing you to consolidate your loans into one single debt. Upon consolidation, you would be granted a fixed rate based on specific calculations.
Federal student loan consolidation can combine the following types of loans:
Ultimately, student loan consolidation can result in lower monthly payments. The process can be quite complex and it is advised that you let a Chicago bankruptcy lawyer review the legalities of your case. Sometimes, attempting to handle a debt consolidation on your own could leave you worse off than before.
If you are considering taking steps to consolidate your debt, our Bankruptcy Attorney Joseph P. Doyle encourages you to get in touch with our office before initiating the process. This bankruptcy alternative could be beneficial under the right circumstances, but it could also end up hurting you in the end if you do not understand what you are getting yourself into. For this reason, we suggest that you proceed on the side of caution and consult with our legal team first.
All you have to is give us a call at (312) 957-8077 to get started.