The Pros and Cons of Debt Consolidation in Oklahoma City
Financial advice is essential whether you are teetering on the threshold of bankruptcy or you are simply trying to manage your financial matters. You may receive frequent calls about debt consolidation. You may ignore those if the situation doesn’t match with yours, but if you are in debt and you want to get rid of the burden, consider the information discussed below before hiring any service of debt consolidation attorneys in OKC.
About Debt Consolidation
Simply stated, debt consolidation is a loan to pay off your debts. The concept of debt consolidation is to make the payment easy and manageable with a lower rate of interest. It is important to note that that this idea is different from debt settlement. Unlike settlement, consolidation doesn’t make any bad impression on your financial reputation.
Types of Debt Consolidation
The concept is to pay off the debts from one loan account. There are several different options for debt consolidation, so let’s focus on each of one individually and with pros and cons.
Balance Transfer With Your Credit Cards
Suppose you have a certain amount a debt with one credit card company. You also use several other credit cards, and those have outstanding credit balance as well. With this type of debt consolidation, you can combine the balance of all your credit cards and pay off your debt. The loan that you opted for from other credit cards can be payable in monthly installments as usual. Generally, the rate of interest for the debt is reduced in this case. You can consult debt consolidation attorneys in OKC for more details.
Now, let’s focus on the other side of the coin. The interest for repaying the debt is low in general. But there is a certain tenure within which the loan needs to be repaid. After a certain time, the rate of interest increases, and the payable amount can be higher than the amount of debt.
A Loan for Debt Consolidation
This is like debt for a debt. You can apply for the loan only to pay off your debts. The payment won’t be controlled by you. The lender will take charge of it and spend only the amount that is required to pay off the debt. This will fall under the category of personal loan, where you are unable to use it for any purpose other than debt clearance.
The pitfall of this type of debt consolidation is that you need to have a fair credit score to get this loan. And apart from that, with a long tenure of small monthly payments, you may end up paying more than your loan. You can consult debt consolidation attorneys in OKC for a way out of this.
A Loan Against Your Home
If you own a house, you can utilize that to get a loan if you need a large amount. With this method, you are eligible to get an amount equivalent to the market value of your home. As soon as you repay the loan, you own the house again. This is easier than the other processes, but it can have an unfortunate consequence.
If you are incapable of repaying the loan, your home may be forcefully closed. The debt consolidation attorneys in OKC can advise you to avoid such incidents.
A General Personal Loan
A personal loan can be used for any purpose you want. You can apply for a personal loan and repay your debts with it. It is less troublesome, and you can control the process.
As a disadvantage, you may need to get the loan at a high rate of interest, and at the end, you may find out that you have paid much more than the loaned amount.
Utilizing an IRA
If you have an IRA or pension plan, you can get a loan against this. It is like borrowing from your nest egg. There would be no tension of repayment or loss other than your saved money.
However, you may need to pay an extra amount as a penalty for withdrawing the amount before the designated time. You also might ruin your security after your retirement.
Chris Mudd offers you the service of debt consolidation attorneys in OKC who are experienced and deal professionally with the legal procedures to make you debt-free without creating a mess.