Financial stress is common among Arkansas residents. Many face dire financial conditions because they live below the poverty line. Others who make a comfortable income still feel financial strain because of high debt balances. Many people turn to debt when they have unexpected expenses, such as from a major illness, a car accident or another major issue. Others rely on debt to fund a lifestyle that they otherwise cannot afford. If you are dealing with high balances on credit cards and loans, you may be wondering what steps you can take to reduce your debt and more easily make your monthly payments. A great solution that is available to many Arkansas residents is debt consolidation. Through a closer analysis of this option, you may decide that today is a great time to apply for a debt consolidation loan.

Debt Consolidation Loans in ArkansasThe High Cost of Living in Arkansas

Arkansas is a financially diverse state. While many live in poverty and struggle with high debt balances, others are financially secure and even wealthy. Understanding why some struggle is important, and the U.S. Census Bureau provides some exceptional statistics regarding the financial situation in the state. The per capita income in Arkansas is less than $23,000 per year. Almost one in five of the state’s residents live in poverty, and many others live in dire financial circumstances above the poverty line. The state’s median monthly mortgage payment is $1,019, and the monthly rent payment on average is $677. High housing costs can combine with other bills and high debt payments to create a truly burdensome financial situation for many residents.

How Debt Consolidation Can Help

If you are interested in pursuing debt consolidation for financial relief, you may be wondering how this process can help you. After all, debt consolidation means that you are refinancing your debts, and you may not see how moving debt from one account to another helps you. There are two factors to consider when exploring the benefits of debt consolidation. The first is the interest rate, and a debt consolidation loan typically has a lower interest rate than your current debts. This alone should provide you with a lower monthly payment. The second factor is the loan term. Revolving debts, such as with credit card accounts, may take years or decades to pay off. A consolidation loan typically has a fixed loan term, and this means that all the debt is paid off at the end of the term. A typical consolidation loan, such as with an unsecured installment loan from a bank, may have a three to seven-year term. This means that all of your debt will be repaid within that period of time. The fixed term also usually lowers monthly debt payments further. As you can see, there are many benefits associated with the use of a debt consolidation loan for financial relief.

Putting the Benefits of Debt Consolidation to Work

As beneficial as debt consolidation is, it is not a financial solution that is right for everyone. Most people who apply for a consolidation loan will need to have a good credit score to qualify. If you have been making late payments or have very high account balances on all of your accounts, you may have a lower credit score and may not qualify. Other debt relief options are available, however. For example, you may benefit from debt negotiation or bankruptcy if consolidation is not an option. These two options can harm your credit rating and should be considered when consolidation is not available. To qualify for a debt consolidation loan, you first need to explore the financing options. Homeowners may apply for a home equity mortgage. All applicants with a decent credit rating may also apply for an unsecured installment loan through a bank. If you have other assets, such as a car that is owned free and clear, you may obtain a secured loan using that asset. Then, you simply use the loan proceeds to pay your high interest rates debts off. It may be helpful to close the accounts to avoid charging up account balances again.

The Legality of Debt Relief in Arkansas

The legality of debt relief in Arkansas is often a top concern, and you may question if consolidation is legal. Consolidation is a common and legal method used by many people, and it simply moves your account balances from one account to another in a legal manner. Even debt negotiations and bankruptcy are legal in Arkansas. Because these options have regulations and can impact your credit rating, legal counsel is advisable before you pursue these methods of debt relief.

It is easy to feel overwhelmed by a tough financial situation, but rest assured that debt relief may be available to you. Explore the consolidation options available for you today as a first step toward improving your financial situation.