The number of bills you have to pay each month is staggering. Some of those bills, particularly the personal loans or credit cards, carry high interest rates. You may feel like you are paying the minimum amount each month and not getting anywhere. When a debt consolidation opportunity arises you are interested and you hope that it can get you off of endless wheel of frustration and start making a dent in your debt repayment.
Common debt consolidation possibilities include: (1) taking out a home equity line or line of credit on your home; (2) transferring debt to a zero percent interest rate credit card; or (3) taking out a debt consolidation loan. We will discuss the pros and cons all three options in this two part series of articles. This article will address the first two options and the second article will look at debt consolidation loans in depth.
Before we get started, it is important to remember that, unfortunately, debt consolidation can create even more trouble. Thus, while it is important to consider the following types of debt consolidation, it is also important to consider the potential problems and think about calling a Minneapolis debt consolidation lawyer for help with your financial problems.
2 Types of Debt Consolidation that Could Create Problems
Some popular ways of consolidating debt include:
- Taking out a Home Equity Line or Line of Credit. Of course, this assumes that you have enough equity in your home to qualify for such a loan. The benefits of using home equity to pay off your other debts include typically paying a lower interest rate than you do on credit cards and private loans and getting a tax break on the interest paid.
While these benefits may be enticing, there is one big risk associated with this method of debt consolidation. If you default on paying this loan, you could lose your home.
- Zero Interest Credit Cards. Zero interest credit cards can be enticing – especially if your current debts carry high interest rates. For the time that the interest rate remains zero, all of your payments will go to principal and reduce your debt load.
However, it is important to remember that the zero interest rate on your zero interest rate credit card may only be for a limited time and may be sharply higher after the introductory period or if you miss a payment.
Contact a Minneapolis Debt Consolidation Attorney for Help
In order to determine if a certain debt consolidation plan is in your best interest, and to learn more about all of your Minnesota debt consolidation options including, but not limited to, bankruptcy, it is important to contact an experienced Minnesota debt consolidation lawyer for a free consultation. You can reach an experienced attorney today via this website or by calling MN (952) 920-1001 or AZ (480) 207-2203. We also invite you to learn more about your options in our FREE book: What You Need to Know About Filing Bankruptcy in Minnesota.