Debt consolidation is sometimes a necessary way to go to resolve too much credit card debt or unpaid bills that need to be collected. Usually the best way to resolve debt is to try and organize the amounts of all that you owe your various creditors and formulate a plan to pay off the debt. It sometimes helps to seek the advice of a credit counseling service or find other useful information about paying down your debts. Sometimes you can even contact your creditors directly and explain that you’ve now got a plan to pay off the debt but need to do so in various increments, and then see if they’re willing to lower your interest rates on your debt as well. But you may need to hire a debt consolidation company or possibly take out a debt consolidation loan if none of the previous methods are working. It’s also good to know Kentucky’s laws for debt consolidation and finance.
Should You Apply For A Debt Consolidation Loan?
When you hear the words “debt consolidation,” often the first thing that comes to mind is a debt consolidation loan, a service that is commonly advertised through various search engine ads and sometimes email marketing. A debt consolidation loan could be the best or the worst idea depending on how you pay the loan off and who the lender is. What debt consolidation loans can do is pay off the total amount of debt you owe to all your creditors and then you simply pay the consolidation loan off in installments.
This may work out great if you know you can meet the monthly payments and the interest is favorable. But if you have a debt consolidation loan with very high monthly interest or APRs, you could end up paying a lot more for this loan than you originally had to pay for all your debts. Before you apply for or take out a debt consolidation loan, you should be careful about obtaining it from a bank alternative such as a payday lender or a non-accredited party. There are a few online lenders as well as credit unions who charge less interest than banks, so it’s not always bad to go outside the bank, but you will want to do your homework on anyone you borrow from.
Why Debt Consolidation Companies Are Better Than Trying To Fix The Situation On Your Own
Sometimes you have bills coming from so many creditors in such high amounts that it just feels impossible to try and pay them all off. That’s when you can hire a debt consolidation company whether it’s a credit counseling service that helps you form a plan to pay off your bills, or even a debt management plan or company that the counselor may recommend to you. In some cases if you’ve been having extensive problems with creditor phone calls and harassing letters, you may be able to hire an attorney to keep the creditors at bay and possibly to work on your behalf in dealing with them. It’s good to seek the advice of a credit or debt counselor first because they may be able to help you gain control of your own finances without needing a debt management plan, but if they do recommend a debt management plan make sure that the counselor is certified with the Better Business Bureau or meets local accreditation requirements.
Also keep in mind that debt management is not the same as debt settlement. There are also companies out there who hire attorneys and have you making payments into an account that will then be used to pay a reduced amount of debt that you owe to your creditors called debt settlement companies. This plan could work if your creditors agree to a settlement and will take amount you’ve put into this plan over a given period of time. But there is absolutely no guarantee that they will settle, and enrolling in a program like this could mean you will be required to stop making payments to creditors which could have a big impact on your credit score and possibly could result in a lawsuit
What To Know About Kentucky Debt Consolidation Laws
It’s important to know your rights as you’re trying to figure out how to repay your creditors. The Consumer Financial Protection Bureau gives information on how creditors can and cannot ask you for collections in accordance with the Fair Debt Collection Practices Act. If you feel the creditor has violated any statutes of the FDCPA, you could potentially win a lawsuit plus damages in court. The Kentucky Attorney General’s office also has more information about what credit counseling and debt relief agencies must tell you about their services, and various fees and insurance policies they must follow.