Illinois is the 5th largest state in the United States by population. According to the US Census Bureau it had an estimated population of 12,880,580 in 2014, which was an increase of 3.3% since the year 2000. Its median income per resident for the years 2012- 2013 was $53,322. This ranked Illinois 14th in the US for median income or up a full 1% since the states’ two-year average of 2010-2011. The problems faced by Illinois residents can also be seen in the average credit score of people applying for mortgages in 2011, which was 726 or down six points from the previous year.
Illinois consists of 55,518.93 square miles and has 102 counties. As most people know it was the home of Abraham Lincoln prior to his election as President but what few people know, outside of the states’ residents, is that Illinois has a very wide variety of weather including major winter storms, deadly tornadoes and spectacular heat and cold waves.
Many Illinois’ residents are clearly hurting financially as they have an average credit card debt load of $7,132 per borrower. In addition, the average Illinois resident owes $145,508 in mortgage debt and Illinois college graduates have an average of $28,543 in student loan debt. This means that the average resident carries a debt load of $152,640 and Illinois’ college graduates are an average of 181,183 in debt. As another example of this the average hourly earning cost-of-living adjusted wage for the Chicago metro area was just $25.11 and of the Peoria area just $22.62
Given these statistics it’s no wonder that people all over Chicago are searching for the best debt solutions for their debt problems.
Searching for Illinois debt consolidation
If you have a pile of credit card debt with balances that never seem to go down because the APR interest rate is too high or you keep getting hit with late fees and over-limit fees you need to take a hard look into debt consolidation in Illinois.
Why debt consolidation?
Consolidating your debts allows you to free up some much needed cash to pay for your other essential bills – gas, groceries, rent, utilities and so on. However, there is a misconception about debt consolidation. It’s because when most people hear the term debt consolidation they assume it comes in the form of a loan. And while a debt consolidation loan can be a good option it’s not the only one available. In fact, in some cases it’s not even an option. For example, if you’ve missed several or more payments on your credit cards or a personal line of credit, your credit score will be such that you might not be able to get a low APR (Annual Percentage Rate) debt consolidation loan.
The types of debt consolidation loans
There are two different types of debt consolidation loans – secured and unsecured. An unsecured loan is often called a signature loan because if you can qualify for one all that you’re basically required to do is sign for it. In comparison a secured loan is one where you would need to provide collateral in the form of some asset. While that asset could be almost anything of value such as a boat or recreation vehicle it’s most often the borrower’s house in the form of a home equity loan or homeowners equity line of credit. If you don’t own your own home or don’t have a sufficient amount of equity that a debt consolidation loan would probably not be the answer. Plus, when you consolidate several other debts into a debt consolidation loan all you’re doing is shifting your debts from one group of lenders to a new one and you’ve done nothing to reduce the amount you owe.
If you choose to work with a debt consolidation company such as Debt Consolidation USA you will have a counselor who will talk with you about other debt relief options besides just a debt consolidation loan and discuss the pros and cons of each. This will likely include the following:
Consumer credit counseling
This form of debt consolidation has been around for many years and has helped thousands of Americans get out from under their debts. There are numerous consumer credit counseling companies available online and there could be one near where you live. In either event when you sign up for credit counseling you will have a counselor that will review all of your finances and help you develop a budget that would allow you to get your debts under control. One of these counseling sessions normally takes 45 minutes to an hour.
A debt management plan
If you’re having a really serious problem with debt and no amount of budgeting would get you out of trouble your consumer credit counselor will likely suggest a debt management plan (DMP). This plan will be based on what you could actually afford to pay on your debts and not on your outstanding balances. Once the two of you agree on a plan your counselor will contact your lenders and first attempt to negotiate reductions in your interest rates. Next, he or she will present your DMP to your lenders for their approval. If all or most all of your lenders agree to your DMP you will no longer be required to pay them. You will pay the consumer credit counseling agency instead and it will take responsibility for paying your lenders so that your debts have now been consolidated.
There are some important pros and cons to a debt management plan. The biggest pros are that your debts will be consolidated into just one easy to remember payment and you will likely have a lower monthly payment than the total of the payments you’ve been making each month. In addition, you will no longer be required to interact with your lenders or any debt collector that’s been harassing you. The con or downside of a DMP is that you will be required to give up any credit cards that are in your debt management plan and you will be strongly advised not to take on any new debt until you’ve completed your plan, which typically takes five years. Nearly 50% of the people who sign up for a debt management plan never complete it and these are the reasons why.
A third way to consolidate debts – at least credit card debts – is by transferring all of your credit card balances to a new card with a lower interest rate or even better one of those cards that have zero percent interest for anywhere from 6 to 18 months. If you could qualify for one of these cards it would be definitely your best choice because you’d have a period of time during which you wouldn’t pay any interest so that all of your monthly payments would go towards reducing your balance. If you focused a lot of effort on paying off that balance you could actually be debt-free before your promotional period ended. And that would be good because once that introductory period ends your interest rate could go as high as 19%.
A fourth option for getting debts under control is through debt negotiation or what’s sometimes called debt arbitration. This is where you contact your lenders and ask for a concession that could help you get your debts paid off. There are four concessions you could negotiate.
- Reducing your interest rates
- Waiving your payments for several months
- Converting your monthly payments into a payment plan
Settling the debt
Depending on how much you owe on a specific credit card getting your interest rate reduced could go a long ways towards helping you pay off the debt. As an example of this suppose that you owed $5000 on a credit card at 19% with a minimum payment of 4% ($200) but got that interest rate lowered to 12%. This could reduce your monthly payments by as much as 50% and would certainly help you get out of debt much quicker.
If you were able to negotiate a waiver where you wouldn’t have to make any payments on your debs for two or three months and would time so that you might be able to get caught up on your debts. The third option, to get your monthly payments converted into a payment plan has some important pluses but also some minuses. The biggest positives are that you would have a fixed payment and a fixed term so you would know exactly when you would have the debt paid off. The downside of this option is that you would probably be required to give up your credit cards. You could also find it difficult to get new credit in the future.
Of the four options described above there is only one that results in debt consolidation and that is debt settlement. If you’re not familiar with this option it’s where a debt settlement company contacts your lenders and offers to make lump sum payments on your behalf to settle your debts and for less than their balances. As an example of this, a debt settlement company might be able to settle a $10,000 debt for $5000. Of course, these companies do charge for their services. The reputable ones charge a flat fee that can be anywhere from 15% to 25% of the total amount of your debt. While 25% might seem high it’s important to remember that if the settlement company were to get a $10,000 credit card debt reduced to $5000 you would still be ahead of the game even after paying its fee. The top debt settlement companies have a 100% satisfaction guarantee so that if you were to become dissatisfied with your program at any time for any reason you could drop out and not be charged a single cent.
Bankruptcy is sometimes referred to as the nuclear option because it could get all – or most all –of your unsecured debts dismissed. The idea of becoming debt free in just a few months could sound very tempting but it’s important to understand that not even a bankruptcy can get rid of secured debt such as auto loans or a mortgage. There are also some unsecured debts that a bankruptcy can’t dismiss including spousal support, child support, alimony, student loan debts and tax debts. And, of course, after your bankruptcy it could be several years before you would be able to get new credit and the bankruptcy will stay in your credit file for 10 years. Many employers now routinely check credit reports before hiring an employee so having a bankruptcy in your credit file could make it hard for you to get a new job.
Contacting a debt consolidation company
All of these options can be very confusing what with their various pros and cons. When you contact a reputable debt consolidation company like Debt Consolidation USA your counselor will discuss all of these options with their costs, benefits, pros and cons. This can be very helpful because it’s best to know about all of your options so that you can choose the best solution given your debt problems and your financial situation. Not every one of these options works best for everyone. You have unique financial circumstances that are different from your neighbor so what works best for her or him may not be what works for you. The best option of all is to get advice from professionals who have years of experience dealing with all the major creditors – Bank of America, Chase, Capital One, Citibank – etc.
If you find yourself struggling with personal loans and credit card debt in Illinois, cheer up. There is help available. Some form of debt consolidation could be your best answer and expert credit counselors can advise you as to which option could help you the most depending on your personal financial crisis.
Take a few moments and speak with an adviser who can help you with Chicago Illinois debt consolidation. You don’t have to keep struggling when it may not even be your entire fault.