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Debt Consolidation Loans and Debt Management Debt Consolidation Loans: Yes or No?
A multitude of small monthly payments can add up to very big trouble. Before you know how it happened, you can suddenly have more payments going out than you have income coming in every month.
You aren't alone. It happens to a lot of people.
On the upside of debt consolidation loans, all debt is included. In debt management agreements, only unsecured debt is considered (credit cards). But in a debt consolidation loan, all debt is considered...secured debt as well as unsecured debt.
On the downside of debt consolidation loans, these loans are almost always second mortgages. In a nutshell...you really are betting the farm (the house) that you can meet the monthly payments every month until the consolidation loan is paid off.
With debt management agreements, even if it comes to the point where you must declare bankruptcy, this is still unsecured debt. Courts can set it aside. When you make a debt consolidation loan in the form of a second mortgage, this debt that was once unsecured now becomes secured. If it comes to the point where you must declare bankruptcy, your home can be foreclosed upon to satisfy debtors.
This point should not be taken lightly. Your home and the equity that you are establishing in it is your largest single asset. The mortgage on your home is usually also your largest monthly payment.
The low monthly payment that is promised with a debt consolidation loan is not always because the interest rate is lower. Sometimes it is because the debt payments have been extended for many additional years instead. Second mortgages can be as long as 30 years, and remember that you have bet the house that you could make every single one of those payments in full and on time.
See Also:
Debt management calculators -- Bankrate.com
| Easy Credit and Debt Management Debt Management Experts
People who work as debt management experts go to school for that sort of thing. Many spend four years or more getting college degrees that identify them as experts in the money and debt management fields. And they are experts, there's no doubt about it.
The best of the debt management experts and debt management teachers, however, are those who have learned to manage their personal finances and their personal debts, and then passed that knowledge along to their children.
Those who actually do it are the experts, and they are the ones that we need to learn from to avoid having to visit with a well-educated debt management expert because we have gotten ourselves into financial hot water.
As I look around at expert debt managers (those who successfully manage their own finances) I find that they have many things in common. They don't all do things exactly the same way, of course, but the structure in which they manage their finances is basically the same.
1. They save first. Those people who know how to save very rarely get into financial trouble. Sure, they can. Life can throw some pretty hard curve balls....the loss of a job or a major illness. But unless their financial trouble is caused by an outside force they will not get themselves in debt up to their eyeballs.
2. They live within their means. They do not base their spending upon what their friends have. The neighbors might buy a new car, but that will have no bearing upon whether they do or not.
3. They all have budgets. Not only do they have budgets, but they live within the constraints of that budget. They do not make impulse buys. If asked, they could tell you how much is spent each month on food, shelter, clothing, utilities, and transportation. |
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| Singing the Debt Management Blues Debt Management through Bankruptcy
Bankruptcy is a last resort! It should never even be considered as an option until all other options of debt relief have been completely exhausted -- at least not for us ordinary mortals.
If you do find yourself in the position of having to declare bankruptcy, you will be in some pretty good company. Donald Trump, Burt Reynolds, Walt Disney, Wayne Newton, George Jones, MC Hammer, and Johnny Unitas are just a few of the very famous people who have had to declare bankruptcy and then been able to get on with their lives.
It isn't the end of the world. You will survive!
Bankruptcy laws have changed. There was a time when filing bankruptcy erased all debts but that really is no longer the case. You need a lawyer to guide you through the bankruptcy process. Some of your assets are protected even today, and without a good lawyer in your corner, you can be fooled into thinking that they are not protected.
Don't take the chance. If you must file for bankruptcy, get a good bankruptcy lawyer in your corner so that you come out on the other side in as good shape as possible.
Don't listen to hearsay and rumors. You need facts...good concrete information. A lawyer who specializes in bankruptcy can get you the very best settlements that are possible. The harassing phone calls will stop immediately.
Yes, you will lose most of your assets through bankruptcy, but you will be getting a clean slate. Contrary to popular opinion, it is sometimes easier to get loans and credit cards after bankruptcy than it was prior to the bankruptcy.
You will have to start over, so to speak, after bankruptcy, but that doesn't necessarily mean starting from zero. You can retain many of your assets if you have the right legal counsel. |
Related Topics: The Traps of Debt Consolidation for Debt Management,
Debt Management Experts, Five Secrets of Debt Management
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