No one plans to let their credit card debt get out of hand, but for many, unforeseen circumstances or an inattention to spending habits can lead to a serious debt issue. In many cases, credit card debt levels reach staggering heights before it becomes obvious that something must be done to regain financial stability. One path that many in Florida consider is debt consolidation.
Debt consolidation involves taking out a new loan for the purpose of paying down multiple existing debts. In theory, the borrower can pay off higher interest accounts with the proceeds from a lower interest loan. Another benefit is having fewer monthly payments to track, and often a lower monthly cost when compared to paying fines and fees associated with multiple accounts.
Debt consolidation is a legitimate means of repaying high levels of credit card debt, but it is a process that can take a significant period of time to complete. Borrowers must be careful to research the cost of various loan options, and must make their monthly payments in full and on time. With a combination of dedication and diligence, it is possible to repay credit card and other debts over a period of several years.
For some in Florida, the need for debt relief is immediate. Using a consolidation loan to pay down credit card debt may not be an option, especially for those who also have serious credit problems. In such cases, a faster and more reliable path to debt relief may lie in the form of personal bankruptcy, which can eliminate many forms of consumer debt through the discharge process.
Source: Investopedia, "Debt Consolidation: When It Helps, When It Doesn't", Mark P. Cussen, May 14, 2014