The state of Louisiana ranks among the ten poorest states in America, which means that many Louisiana residents have multiple debts and are having a hard time managing them with their current incomes. Due to economic recessions in the state, many everyday consumers are facing declines in their home value while others have lost their jobs and are now saddled with massive credit card debts. In an effort to stay afloat, many Louisianans are turning to debt management options such as debt consolidation.
Debt consolidation is a simple debt settlement plan that allows you to merge your current debts into one. You will then service the single debt at a fixed interest rate over an extended time period. Debt consolidation is a debt management plan devised in such a way that most of your monthly payments go towards the principal and not the interest. The process of Debt consolidation in Louisiana is similar to other American states; you can sign up with a debt consolidation company in the state or apply for a debt consolidation loan.
How Can A Louisiana Debt Consolidation Program Help You?
If you need help dealing with your debt issues, approaching a debt consolidation company is a good option. Make sure that check the company’s accreditation with Better Business Bureau before you approach them. Some of the debts a debt consolidation program can help you with include payday loans, medical bills, personal loans, private student loans, and credit cards debts. Simply put, you might be a prime candidate for a debt consolidation plan if you are constantly finding yourself drowning in due dates. A debt consolidation company will:
- Recommend a debt consolidation program based on your financial situation and debt issues.
- Notify your creditors that they are in charge of your debts henceforth. The creditors will, in turn, cease all communications with you and start dealing directly with the debt consolidation company.
- Negotiate for lower rates with all creditors on your behalf. A debt consolidation company will also arbitrate for the elimination of all existing penalties.
- Devise a new payment plan that falls within your budget using the new interest rates. You will be required to settle one monthly payment to the debt consolidation company as per the new payment plan.
- Use your monthly payments to pay off your creditors. This process will go on until all your debts are paid off.
Consolidating Your Debts with a Consolidation Loan in Louisiana
If you think you can manage your debt consolidation process on your own, a consolidation loan is the way to go. It’s a hassle-free way to manage your debts where you borrow a low-interest loan and use it to pay off your creditors. You will just be left with the obligation of paying off your consolidation loan. Typically, debt consolidation loans come with lower interest rates which will significantly reduce your monthly instalments. A debt consolidation loan may be secured or unsecured.
Secured vs. Unsecured Consolidation Loans
When you take a secured consolidation loan, you should pledge some property; say a car or your house to secure the loan. If you fail to pay the loan, the bank will foreclose your house or repossess your car and use it to service the loan. Secured loans carry lower interest rates which will make your monthly payments more affordable. Unsecured loans, on the other hand, don’t require any form of collateral. Unsecured loans are solely based on your promise to pay. The only downside of an unsecured loan is that you’ll need to have a stellar credit score to secure one.
Debt Collection Laws in Louisiana
The Louisiana Fair Debt Collection Practices Act (FDCPA) is a set of regulations that govern the process of debt collection in the state. Under the FDCPA, the following stipulations are to be observed:
- The initial creditor cannot communicate with any person who does not reside in the debtor’s home, except other creditors and credit bureaus. There are several exemptions to this law.
- After the debtor has notified the creditor to cease communication, the creditor is only allowed to send one notice per month which should not contain any kind of threats.
- The original creditor is only allowed to make a maximum of four personal contacts with the debtor after receiving the notice to stop communication.
- The cease communication decree will be voided if the original creditor sues and wins the case.
- A collection agency cannot exceed the stipulated interest rate of 12%.
Benefits of Debt Consolidation
- A debt consolidation program could improve an individual’s credit score if the process is done carefully and correctly.
- Debt consolidation is a good way to ward off debt harassments.
- You get to make on single payment every month instead of several.
- The said single monthly payment comes at a reduced interest rate.
Once all your debts have been written off, don’t close your account or apply for other loans immediately. This might hurt your credit score because it opens up other chances for you to default on your loans once again.