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Debt Consolidation Loans in Brooklyn, NY
As an integral part of the New York City metropolitan area, Brooklyn enjoys one of the most vibrant economies in the world. In fact, New York City often trades back and forth with Tokyo as the city with the single largest gross metropolitan product in the world. The New York area features just about every industry on earth, in some capacity, but is particularly dominated by finance, insurance and real estate. As the city with the most billionaires on earth, New York is arguably not just the center of the financial universe but the economic capital of the world.
Brooklyn features a relatively low unemployment rate of around 5%, which tracks that of the broader state. New York also figures very low in the rankings of states with the highest bankruptcy rates. This partially reflects the generally rock-solid state economy that rarely wanes, even during the worst recessions.
With such vast wealth and opportunity for its residents, it would be tempting to think that Brooklynites would face little economic hardship or personal financial crises. However, as in the United States at large, the high-level economic data don’t tell the full story.
Despite all the shimmering steel and chrome, New York has long had an entrenched underclass that has found it difficult to achieve the American Dream. With radically uneven distributions of wealth, some parts of Brooklyn are divided into caste-like divisions separating the working poor from the leisurely rich.
Although outright financial strife is not nearly as widespread as in places like California, Brooklynites unlucky enough not to be born into the upper crust face some of the highest housing costs in the country. Costs of daily living are no less taxing. For this reason, many Brooklynites find themselves, at one time or another, facing financial difficulties.
New York has relatively favorable bankruptcy laws for the debtor. Still, there are often much better ways to deal with financial hardship than going the route of Chapter 7. For many Brooklynites, debt consolidation may be a far better alternative, one that will allow them to maintain their credit rating and lifestyle and allow a quicker exit from debt.
Who debt consolidation can help and who it can’t
Debt consolidation can be a great blessing for those who use it appropriately. In the broadest terms, debt consolidation is most likely to help those who have private, unsecured debt, a written budget and a solid plan for addressing the issues that led to the debt in the first place and who have a reasonable likelihood of paying off their debt permanently within three to five years. For people who fit these criteria, debt consolidation is likely to be, far and away, the best option.
However, not all debtors will fit this description. An example of a situation where a debtor would be better served by declaring outright bankruptcy would be someone who had bypass surgery with an extended hospital stay and is now unable to work. The combination of hundreds of thousands of dollars in medical bills and an income that may be permanently reduced or lost is a strong indication that bankruptcy may be the better option.
It’s also important to remember that, in a case like that illustrated above, debt consolidation can actually prove detrimental. Say that the debtor above had equity totaling $200,000 in his house and $300,000 in medical bills. He decides to take out a home equity line of credit to consolidate some of his various medical bills into one payment. He has now created a $200,000 secured debt out of a $200,000 unsecured debt. Now, rather than dealing with unsecured creditors who have little standing in a bankruptcy proceeding, he’s dealing with secured creditors who have a first lien on his house. This is a potentially disastrous decision that could result in the debtor losing his home. Such examples illustrate why it’s imperative to know whether debt consolidation is right before commencing.
That said, if in the same situation the debtor was continuing to earn $150,000 per year, debt consolidation would undoubtedly be the best option, even with a home equity line of credit. That’s because the debtor would retain all his assets, his credit rating and still be able to get small business or corporate financing if he were a business owner. For those with significant income and relatively low amounts of debt, consolidation will almost always be the best option.
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