Like many homeowners who are struggling with minimum payments on unsecured debts you might be considering debt relief solutions. Many American families and individuals are struggling with high minimum payments on credit cards, personal loans, payday loans and other unsecured debts. You might wonder about consolidation loans and whether it is a possibility for your needs and learning about the loans is the first part of getting the problems under control.
Debt to Consolidate:
If you are like many American citizens, you have probably taken out unsecured debts. When looking into consolidation solutions that will make it easier to manage your minimum payments, you need to understand what it possible to consolidate and what is not.
A consolidation loan is designed for those high interest unsecured debts that easily get out of control. Unsecured debts typically include personal loans, medical bills, credit cards and payday loans.
The consolidation will help reduce the cost of the debts so that you are able to manage your minimum payments and start making a debt elimination plan. Depending on the situation, the best solution for your debt problems will vary.
How the Loans Work:
When you are looking at $35,000 debt consolidation loans, you need to understand how the loans work. Without understand the basics of how the $35,000 debt consolidation loans work, you will end up with a bigger problem later.
A debt consolidation loan is a new loan used to pay off your other unsecured debts. You take out a loan for $35,000 and then use the funds of that loan to repay your high interest debts.
The other debts are paid in full and then you have a new debt of the same amount as the original in the form of a loan. The new loan should ideally have a lower interest rate than the original average interest for your other accounts to reduce the monthly payment.
Obtaining the Loan:
The key problem with taking out any consolidation loan is that it usually requires a high credit score. As someone who has been struggling to manage your minimum payments and personal expenses, you have probably seen a drop in your credit rating over the past few months. Unfortunately, this drop in credit can make obtaining the loan more difficult.
In most situations, a consolidation loan of any amount will require at FICO score around 700 or greater. A loan of $35,000 will often require an even higher score from most companies or banks because of the large amount of funds required.
This high credit score requirement will often make getting a consolidation loan an impossibility for many individuals. If you are already struggling with payments, you might have paid a few credit cards or other debts a little late in the last few months. That will have a negative impact on the numbers and might disqualify you.
The Debt Trap:
The other problem you need to consider before taking out a consolidation loan, particularly a large loan of $35,000, is the potential to end up in a debt trap. A debt trap is a situation that causes you to build up more debt because it does not consider the spending habits that caused the high debts originally.
When you take out a consolidation loan, you repay the other debts with the funds provided. Unfortunately, you are not required to close any revolving accounts. This means that you can still use those credit cards or that personal line of credit after paying the full amount.
Unless you close the accounts or have the willpower to resist spending on the accounts, you can end up rebuilding the same level of debt. The problem is that you will also have the $35,000 consolidation loan to pay and ultimately this creates a larger debt that is impossible to manage.
Taking out a consolidation loan is not often the best choice. Fortunately, you do have another alternative to help get your debts under control. You can work with a negotiation service that will discuss the potential solutions with the creditors.
Negotiation services will discuss waived fees, reduced interest and the possibility of settling the account for less than you owe. As a result, you can completely clear the debts and move on without the expense of minimum payments each month.
With negotiation services, you can settle your debts within 24 to 48 months of starting the program. Furthermore, you will not end up in a debt trap because you are not taking on a new loan. It also does not require excellent credit, making it possible to obtain assistance with your debts.
Getting through debt problems is not always easy, but consolidation services through negotiation can help. Fill out the form or call today for a free debt analysis and more information about potential solutions to your debt problems.