The island of Manhattan is one of the most expensive areas in the country. With sky-high rents and above-average living expenses, it isn’t surprising that many people in Manhattan, NY struggle with debt they are unable to repay.
If you’re unable to repay your unsecured debts, you may have relief options. One of the most common kinds of debt relief for Manhattan residents is debt consolidation.
What is Debt Consolidation?
Debt consolidation allows to you take many different loans and put them in one place. If you feel like you’re drowning in debt because you have a new payment due every week, debt consolidation can help you track your repayment more easily.
Debt consolation is also beneficial because it gives you the opportunity to renegotiate the terms of your loan. Under debt consolidation, you would take out a loan that covers the other debts that you have. Using the money you receive from your consolidation loan, you can pay off what you owe to your other creditors, closing those debts and allowing you to focus on repaying your new loan.
While debt consolidation does not save you money in the long run, it does give you more breathing room with your month to month payments. Your debt consolidation loan will typically have an extended final payment date and lower interest rate, meaning you will pay less each month on your payments.
Debt consolidation typically expands a debt. While this gives you more time to repay the loan, it also means you will be paying back the loan longer. Depending on your new interest rate, you may actually end up spending more money on your debt through debt consolidation.
Unlike other forms of debt relief, debt consolidation typically won’t have a negative affect on your credit score. Because it allows you to pay off your debt more easily, debt consolidation can actually help you improve your credit score.
Legal Considerations for Debt Relief in New York
If you are considering debt consolidation in Manhattan, you should understand all the rules, regulations and legal considerations for the state. While debt consolidation and debt reduction is available in the state of New York, there are still some extra details you need to know.
First, you are not obligated to repay a debt if it is outside the statute of limitations for debt in the state. In Manhattan and New York, the statute of limitations for a debt is 6 years. If you have not made a payment on a debt in over 6 years, then you are no longer responsible for repaying.
Debt collectors in the state of New York must also comply with the Fair Debt Collection Practices Act. If there are debt collectors attempting to get money from you, be sure you understand the rules and regulations surrounding the practices of debt collectors. If they are not complying with the FDCPA, you may not be responsible for repaying.
Who Should Consider Debt Consolidation in Manhattan?
Debt consolidation is not right for everyone. While it can be a way to get back on your feet, it is typically not helpful if your debt is too far out of control. If you will still struggle to pay the monthly payments even after consolidating your debt, you may want to consider another debt relief option.
In order to qualify for a debt consolidation program, you must have good credit. For some Manhattan loan providers, this means having a score above 600. If you’ve missed a number of payments on your debts, your score may be much lower than this – meaning you may not qualify for a debt consolidation loan.
Debt consolidation works best for individuals looking to free up some money each month. Typically, individuals who get a debt consolidation loan are able to meet the minimum monthly payments on their debts, but they are doing very little to reduce the amount they owe because of their interest rates.
If you’re considering debt consolidation in the city of Manhattan, you may want to consider speaking with a professional before you make your final decision. It may be just what you need to get out from the weight of your debt.