DEBT CONSOLIDATION IN THE STATE OF PENNSYLVANIA
WHAT IS DEBT CONSOLIDATION?
Debt consolidation simply refers to an act of obtaining or taking out a new loan to pay off or settle other existing liabilities or small consumer debts. It is a form of refinancing a debt by simply taking out a loan and incurring a new liability just to settle the existing one.
Debt financing is usually found amongst individuals who take personal loans and have other consumer debts. However, a country’s government can also utilize debt consolidation as a fiscal tool to consolidate corporate debts and even federal debt.
HOW DOES DEBT CONSOLIDATION WORK?
If you have taken a couple of consumer loans like credit card loans, student loans, and other consumer loans, repaying all of them differently may be stressful. Hence, people opt to consolidate those loans together into a single liability and then start to pay them off.
All payments will now be made only on the new debts and not the previous ones. To qualify for debt consolidation, some credit facilities usually require collaterals. This can be a house, land, or any other property acceptable by the lender. The interest rates applicable are usually lesser and repayment is stretched over a large period.
Contrary to some people’s opinion, a lot of creditors and credit facilities are usually more than willing to consolidate loans for their lenders. This is because when a debt is consolidated into one single liability, the chances of the debtor’s repayment automatically increases. Providers of debt consolidation services include banks, credit unions, and facilities, and some specialized loan consolidation firms.
Debt consolidation is not an automatic debt settlement and it does not erase the initial or original debt incurred. All it does is help the borrower transfer the debt to a different lender.
TYPES OF DEBT CONSOLIDATION.
Mainly, there are two types of debt consolidation loans. They are:
1. Secured loans.
Secured loans are loans that are usually backed up by at least one of the borrower’s assets. The said asset secures the lender’s interest and assures them that the borrower will pay back the debt when due. The asset serves as collateral.
2. Unsecured loans.
They are loans that are not backed up by any form of assets and so they are more difficult to obtain. Creditors rarely ever give out these types of loans because of the risks involved should the borrower refuse to pay back. The qualifying amount to obtain this loan is usually lower and with higher interest rates.
DEBT CONSOLIDATION IN THE STATE OF PENNSYLVANIA.
Pennsylvania is a very strong economic powerhouse in the United States of America. Being the home to at least 50 Fortune 500 companies and leading in large-scale agricultural production already sets it apart from other states in the US economically. However, all fingers are not equal. The state of Pennsylvania still struggles with cases where its residents are unable to finance their debt liabilities. Hence, the state has come up with a couple of provisions to assist with ensuring that the citizens are able to meet their obligations. One of these is debt consolidation.
PENNSYLVANIA DEBT MANAGEMENT PLAN: If one is struggling with the repayment of loans, one of the first options is that one can visit a credit counselor in Pennsylvania. These counselors offer the best advice on how to consolidate your debts, they can also seek out the best interest rates and most flexible payback periods.
For example, a credit counselor can liaise with your credit card issuers to ensure you keep paying the loans, at an agreed interest rate.
The Pennsylvania debt management plan prepared by your credit counselor makes room for you to consolidate all your debts into one single liability to be repaid at an agreed interest over a while. Hence, you no longer have to try and keep up with the numerous loans, and you can pay back the loan with a lower interest margin.
Another option is that you can bypass a credit counselor and reach out to a prestigious and competent credit facility to consolidate your loan. This generally saves a lot of time and money spent at the credit counselor.
All that will be done is that your monthly payment schedule will be garnished in a way that you can afford repayments over some time until the debt is fully settled. A good credit score is very important at this point as credit facilities are usually not eager to consolidate loans for people with a low credit score.
PENNSYLVANIA DEBT SETTLEMENT PLAN: The State of Pennsylvania also has a debt settlement plan to assist its citizens and residents repay loans. How does it work? All you have to do as a borrower is to pay a huge amount of the debt as a lump sum to each of your creditors and this amount will settle your full debt. This is a good alternative to getting the debt management plan. However, since the borrower will not be paying their debts in full, this has a direct negative impact on their credit score, which can reduce their chances of borrowing in the future. It is important to note that the debt settlement plan can only work if the borrower can afford to pay a lump sum at a time. If the borrower can only afford to pay in installments, then the debt management plan is preferable.
PENNSYLVANIA BANKRUPTCY: A lot of people are usually hesitant to file for bankruptcy. However, it may be one’s last resort when it is impossible for them to afford to finance their liabilities. If you do not have enough disposable income to make payments on a debt settlement or consolidation plan, filing for Pennsylvania bankruptcy may be your best option. This option allows you to seek the law’s help by helping you legally nullify and cancel your debts by declaring you bankrupt and financially incapable of paying back debts. The Pennsylvania bankruptcy allows you to file without the services of an attorney and saves you the worry of paying their fees. In cases where an attorney is required. Competent, yet affordable ones will be sought on behalf of the borrower.
HOW TO APPLY FOR THE PENNSYLVANIA DEBT CONSOLIDATION.
Applications can be made at banks, financial firms and debt relief companies that are licensed and bonded Pennsylvania. It is important that the firm selected is a competent, reliable, and trustworthy one to avoid mistakes. Also, it is important to do prior research on the credit facility you are applying through to ensure they are capable, also check previous reviews of how they have handled debt consolidation in the past.
The next step is to review your options. After applying, start planning and reviewing the possible options you would like to explore and how well they suit your financial situation. This helps you plan and prevents you from making another financial blunder.
Always ensure you go with the best possible option out of the situation.
CONCLUSION.
If you live in Pennsylvania and you are looking to apply for debt consolidation to pay off your debts, then the best time to start is now. The earlier you find a solution to paying off your debts, the better. This will save you a lot of time, extra interests, extra charges incurred. CuraDebt can guide you.
