Debt consolidation loans are intended to lump all of your debts together into one low payment. To get these loans, many are taken as a loan secured by your home or other assets. You may get a better rate with a consolidation loan than with high-interest loans and credit cards.
Another benefit is the one monthly payment sometimes is lower than your debt payments before you consolidated. If your source of income is secure and you know you will be able to pay the consolidated loan over the next several years it might be a good idea to pay off some high-interest credit cards and loans.
Could Lose your Property
The problem with these loans is you took the debt that was unsecured and attached it to your property. Now if something happens and you are unable to pay the loan, you risk losing your home. Being late on the original unsecured debt would have incurred collectors phone calls and letters, now you risk losing your home or property.
Another option to getting a handle on your debt is to file bankruptcy. For a Chapter 7 bankruptcy, you can eliminate your qualifying debt in as little as three to six months. For Chapter 13 bankruptcy, you will keep all of your property and pay back your debt over a period of three to five years. The benefit of Chapter 13 is if you are behind in your home payments and worried you might lose your house.
If you have overwhelming debt, contact a McAllen bankruptcy attorney to find out what options you have to eliminate your debt.