Debt Consolidation in Illinois |
By Kari Johnson on November 16, 2011
.jpg.aspx) A lot of people in Illinois, just like the rest of the United States, are dealing with debts that they can’t pay. If this is you, you may be considering debt consolidation as an option for dealing with your debt. This is certainly a possibility, but you should keep in mind that debt consolidation does not remove your debt.
With debt consolidation, a debtor takes a loan out to pay off their other debts. This does not eliminate the debt, but only transfers it to a different place: in the new loan.
This may be desirable for a couple reasons. For one thing, having one monthly payment may be less stressful or confusing than having multiple payments. The best and most convincing reason is to lower your interest payments, if the interest rates on the new loan are lower than those you are currently paying. If they are not, you really shouldn’t bother.
Keep in mind that this doesn’t change the amount you owe, just who you owe it to and, potentially, how much you will owe in the future.
In Illinois, depending on how long you have owed this money, your creditors may be granted permission to levy your account or garnish your wages. If they are threatening this and it has made you panicked into doing something for the problem immediately, you should step back and consider if consolidation is really the best way to handle your debt. Never forget that a debt consolidation loan does not eliminate your debt, but simply brings it all together in another place.
Furthermore, if you are having so many debt problems that your credit rating has suffered, the loans you will be able to get will probably have high interest rates or require collateral. If the interest rate is higher than what you’re paying on your money already, even the convenience is not worth the added price. And putting up collateral for your loan is putting your home or car at risk if you cannot pay it.
Obviously, there are different types of debt consolidation loans and programs out there, as well as other ways to handle your debt. You need to do your research and decide which one is right for you and your situation before jumping in.
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