For many people across Georgia, increasing bills are a major concern, and some have a fear of filing for bankruptcy. In this situation, many look to debt consolidation as a means of organizing and reducing their overall debt; however, debt consolidation companies do not always deliver on their promises. At the Cornwell Law Firm, our experienced attorneys can go over all of your legal options for reducing and eliminating your debt, including assistance with debt consolidation. To learn more, call or contact our office in Duluth today.
What is Debt Consolidation?
Debt consolidation is a process in which multiple debts are rolled into a single debt payment. Typically, the individual debts are high interest, and debt consolidation lowers this interest rate on all of the debts by amalgamating them into a single payment. This method allows a person to reorganize and lower their debt so that it can be paid off more quickly.
Generally, there are two ways to consolidate debt. The first method is to get a 0% interest, balance-transfer credit card. A person can transfer the entire balance of their debts onto the card and pay it off in full during the promotional period. However, this method typically requires good or excellent credit in order to qualify. The second method is to get a fixed rate debt consolidation loan. The money from the loan is used to pay off the existing debt, and the loan is paid off in installments over a set term. Even people with poor or bad credit can qualify for these loans, but those with better credit scores typically receive lower interest rates. A person can also consolidate their debts using home equity loans or 401(k) loans, but these come with additional risks.
When Should I Consolidate Debt?
Debt consolidation is not for everyone. A person should consider debt consolidation only if the following applies:
- Monthly debt payments do not exceed 50% of monthly income,
- Your credit is good enough for a 0% interest credit card or debt consolidation loan,
- You have consistent cash flow, and
- You have the capacity to pay off a debt consolidation loan within five years or a zero percent interest credit card before the promotional period ends
However, there are also situations in which debt consolidation is not in a person’s best interest. If the debts are small enough to be paid within a matter of months, this is likely not the best option. Conversely, if the debt payments are more than 50% of your monthly income, you should consider speaking with a lawyer about other debt relief options, such as filing for bankruptcy.
Call or Contact Cornwell Law Firm Now
Are you interested in learning more about debt consolidation from a legal professional? If so, the experienced and knowledgeable debt consolidation lawyers at the Cornwell Law Firm in Duluth are here to help. To schedule a consultation of your case, call the office or contact us today to speak with one of our lawyers.