Financial stress can weigh you down, causing you to feel anxious, sleepless and unhappy. When this source of stress is caused by high debt balances, it may seem as though your mountain of debt continues to increase despite efforts to stop spending and that you never seem to get it under control. While this is an unfortunately common situation for many residents in Colorado, the good news is that you can do something about it. Many people who struggle with debt in Colorado may qualify for a debt consolidation loan. Before you apply for a loan, it is important to know what this type of loan is and who it may be most beneficial for.
Why There Is a Debt Problem in Colorado
The U.S. Census Bureau has reported several statistics for Colorado that may indicate why some people are challenged by a tight budget. For example, the average per capita income in the state is less than $32,500, and approximately 11 percent of the state’s population lives below the poverty line. While others live comfortably with few financial concerns, many live with a heavy debt balance just above the poverty line as well. The housing costs in the state are rather high. The average monthly mortgage payment for a typical homeowner is $1,577, and the average monthly rental payment for housing is $1,002. These high housing expenses combined with a modest per capita income can stress a tight budget, and many rely on debt to survive. Others may have a stringent budget because of high minimum monthly debt payments combined with a high housing payment.
How Debt Consolidation Can Help
Debt consolidation describes the process of refinancing multiple debts into a single loan. Many people who have high debt balances struggle with account management, and they may periodically overlook a payment. This can damage your credit rating and lead to unnecessary late fees. Easier debt management with a single consolidation loan is only one of the benefits of debt consolidation. A consolidation loan typically has a lower interest rate and a fixed term. These two factors can create a much lower monthly payment. Despite the fact that you may be paying less each month toward debt reduction, the fixed term and lower interest rate means that more of each payment you make is applied toward principle. The debt is reduced faster. As you can see, a debt consolidation loan may be exactly what you need to get your finances back on track.
How to Find a Debt Consolidation Loan
While a debt consolidation may be an ideal financial solution for many residents in Colorado who are struggling with high credit card and loan payments and balances, the reality is that this solution is not suitable for everyone. A debt consolidation loan usually is a new loan that the debtor must apply for. This means that you need to have a decent credit score to qualify for a consolidation loan in most cases. If you have been regularly making payments late or have many collections accounts, you may not qualify for a consolidation loan because of your credit scores. If you have managed to maintain a good credit score despite your financial challenges, you may seek a consolidation loan through a bank. Those who have equity in a home may also apply for a second loan or equity loan through a mortgage company. Look for a loan with a fixed term, a lower interest rate than your other accounts have and an affordable monthly payment. While a debt consolidation loan is a prime option for debt relief in Colorado, it is not the only option available. If you do not qualify for a consolidation loan, debt relief is also available through bankruptcy and debt negotiations.
The Laws About Debt Relief in Colorado
There are specific laws about debt collections as well as debt relief in Colorado. For example, the state has established collections laws that prevent creditors from harassing you excessively about funds owed to you. There are also laws about debt relief options, such as who can qualify for debt settlement and bankruptcy. Because debt consolidation is considered an account refinance, the only laws related to this form of debt relief are consumer lending laws. Debt consolidation is an affordable and legal way to overcome your financial situation, and it is suitable for many people in Colorado.
Debt can accrue slowly over a period of years, or it may develop suddenly after a serious illness, a major accident or something similar. Regardless of how your debt developed, you must now find a way to move past this situation. Debt consolidation can make it easier for you to manage payments and reduce debt, making it a great debt relief option for you to consider.