Debt Consolidation Loans
If you live in Arkansas and are struggling with debts spread across multiple credit cards and other types of unsecured debts, you may be wondering if a debt consolidation loan will help. If so, you're certainly not alone. For any number of reasons - medical or hospital bills, unexpected personal hardships, or unemployment - many residents across America are overwhelmed with credit card debt. The good news is, help is available. Many consumers have found relief from their debts thanks to a variety of debt relief options, including debt consolidation loans, debt management plans coordinated by credit counselors, debt settlement or debt negotiation, and even bankruptcy.
If you are struggling with credit cards and other unsecured debts, find out how debt relief plans may be able to help you resolve debts faster and save money. Get your free debt relief evaluation and savings estimate.
How Debt Consolidation Loans Work?
The goal of credit card debt consolidation loans is to combine or "consolidate" multiple high interest rate debts into one, lower interest rate loan. Basically, the concept works like this: The consumer takes the proceeds from the consolidation loan and pays off high interest credit cards, then is left with only one lower interest rate debt consolidation loan to pay off. This option makes sense, and debt consolidation loans can be a reliable form of debt management for some consumers.
However, it may not benefit the consumer to take "unsecured" debt such as credit cards and turn that debt into a new loan that is "secured." Why? Because secured debt is backed by collateral, usually a home or some other valuable asset. If consumers find themselves in a difficult financial position and fail to live up to the terms of their debt consolidation loan, they could risk losing their home or other asset. What's more, many consumers who take out debt consolidation loans do indeed pay off their credit cards, but they often end up accumulating a whole new batch of credit card charges. Now they are responsible for paying off a debt consolidation loan AND a new cycle of credit card charges. Unfortunately this is a very common scene that only causes the consumer's debt crisis to escalate.
If you are considering a debt consolidation loan, first take a moment to find out how a structured debt relief plan could help you resolve debts faster and save money. Get your free debt relief evaluation and savings estimate.
How Debt Management Plans Save Money and Resolve Debts
Debt management programs have helped numerous individuals and families. It is generally a popular choice for consumers who desire relief from high-interest credit card debts as well as other unsecured debts, such as utilities, department store charge cards, gas cards, or even medical or doctor bills. With debt management plans, or DMPs, consumers seek to combine several debts into a single, more affordable, and more predictable payment plan. This payment is made to a credit counseling agency, which then disburses the monthly payments to creditors until all debts are resolved.
Sometimes, consumers believe it would be in their best interest to have a third party work on their behalf. They may choose to utilize a debt management program coordinated through a credit counselor, whereby the debt counselor contacts each individual creditor and convinces them to accept proposals and agree to extend the benefits of debt relief to consumers who are experiencing a financial hardship. The many benefits can include lower interest rates, a waiving of late fees and penalties, and even establishing monthly payments they can more easily afford. When the consumer stops adding new credit card charges and begins, month after month, to pay down debts on time and at lower interest rates, the process of debt resolution becomes solid and "expected." While debt management plans do not magically erase debts, they can be very effective and save a substantial amount of money if followed faithfully. Overall, they allow consumers to honorably resolve debts and fulfill their financial obligations as promised.
Considering debt consolidation or a debt management plan through a credit or debt relief counselor? Take a moment to find out how debt plans may be able to help you resolve debts faster and save money. Get your free debt relief evaluation and savings estimate.
State Programs for Low-Income Individuals
While the state of Arkansas does not have debt grants or programs to help consumers pay off credit card debts, it does have several programs for low-income families and individuals who may need help paying bills, rent or buying groceries. Examples of these state programs include the Low Income Home Energy Assistance Program (LIHEAP), Medicaid, ARKids First! Program, which provides affordable health insurance for children, and a variety of food assistance programs. To learn more, visit the state of Arkansas' official Benefits page.
How Debt Settlement or Debt Negotiation Works
Debt settlement, also called debt negotiation, is another type of debt relief that is gaining popularity as an alternative to personal bankruptcy. Using a debt negotiator, debt settlement is intended for consumers to get individual creditors to agree to "settle" debts for substantially less than the full balance owed. Debt settlement typically involves the process whereby consumers in distress stop paying high interest credit card minimums. Instead, they begin to "set aside" or save that money and use it to make a debt settlement offer to a credit card company through a debt negotiator.
It's important for consumers to be aware that debt settlement is a more aggressive debt relief option. They should know that when they stop paying credit cards or store cards according to the terms of their agreements, creditors can threaten or take legal action. In addition, money that is saved by settling for a lesser amount is subject to taxation. And, while debt settlement will normally have a negative impact on personal credit, it should not be as severe or long lasting an impact as personal bankruptcy.
If you find you have too many credit cards and other unsecured debts and are in need of debt relief assistance, learn more about your debt relief options and to get your free debt relief estimate and savings analysis today.