The word debt consolidation is fairly common in households throughout Texas; however most people do not truly understand what it means. There are various forms of Texas debt consolidation, the most common are: Texas debt consolidation loans, Texas credit counseling programs, and Texas debt settlement. All three of these are different types of programs all geared towards debt relief.
A Texas debt consolidation loan is what many people will consider first when attempting to obtain debt relief. This may seem like the easiest and most painless way out, however for many this option comes with great risk. The issue is that for most people to get a debt consolidation loan there will need to be some kind of security used as collateral offered to receive the loan. In many cases people will use the equity of their home. Thus allowing the consumer to take the money from the loan, and pay off all their unsecured credit card debts; the benefit being possibly getting a lower interest rate with only one consolidated monthly payment.
Most do not see the financial danger of this until it is too late. Essentially what is happening is that these people are taking their low risk unsecured credit card debt and turning it into a much higher risk secured debt against their home. Something that happens quite often is that the person ends up back in debt with their credit cards; it’s just way too easy, you pay off your cards but still have them open with nice balances at zero. The temptation to use these cards again for many is too overwhelming.
Once this happens and the consumer ends up back in credit card debt this time there will be no debt consolidation loan. And what must take precedence over the new credit card debt are the two secured loans against the home; or risk losing the house to foreclosure. At this point these people don’t have much of an option other than going bankrupt or losing their home to foreclosure. Unfortunately most people do not think of this possibility before signing for the debt consolidation loan!
Another option available is credit counseling. Credit counseling programs are similar to debt consolidation loans in that there will be one monthly payment and lower interest. The main difference is that there is no loan taken out. A Texas credit counseling program will require that you enter all of your creditors into the program, leaving you with not a single line of credit. This option is less risky than a loan but does also come with its drawbacks.
For one most credit counseling programs monthly payments are equal to and in some cases even higher than what people are putting out towards their creditors monthly minimums. So for those looking to reduce their monthly outlay this may not be the best program. In addition if just one payment is missed you can get kicked off of the credit counseling program and lose the benefits of one monthly payment at low interest. And the reality is most people cannot guarantee that they can make every payment without delay for years; many credit counseling programs will run you between 5-7 years.
Then there is the option of a Texas debt settlement program. During the past few years with this recession in full swing many people have been turning to debt settlement in an effort to avoid bankruptcy, while still saving money and getting out of debt.
Debt settlement helps people by reducing the actual amount they owe on their balance not their interest rate. If done properly this can result in the debtor becoming debt free in as little as two years and having saved almost half of what they currently owe towards their balances.
However debt settlement is not an easy ride, one must fall behind on their bills in order for their creditors to be willing to negotiate a settlement; falling behind results in collections calls, a damaged credit score, and the possibility of lawsuit.
But for most people the main goal is to escape the credit treadmill ASAP and for these folks debt settlement is the way to go. Recently action has been taken by the FTC to regulate the debt settlement industry greatly in the consumer favor. These regulations have made it so that debt settlement companies can no longer charge their fees upfront before settling their clients’ accounts. This action greatly helps the consumer who needs debt settlement but was nervous about paying money upfront before getting any negotiating done.
For those in Texas who are interested in seeing if Texas debt settlement would be the better option than and Texas debt consolidation program/loan than click the link below. The link below is an application with Prestige Financial Solutions, a company that can offer the citizens of Texas a Texas debt settlement program that charges no upfront fees!
