Improving your financial situation may be at the top of your list of goals you would like to accomplish, but you may not know how to achieve this goal. While many people would like to save more money for the future, they may have a tight budget and a high debt level that prevents them from doing this. Debt is unfortunately common for New York residents, and you may be wondering what you can do to resolve your debt issue so that you can enjoy more freedom and flexibility in your budget. A wonderful option to consider is debt consolidation. Debt consolidation has enabled many New Yorkers to achieve a debt-free status, and it may do the same for you.
Common Financial Challenges for New Yorkers
The U.S. Census Bureau has revealed stunning facts about the finances of the average New Yorker. The average homeowner in this state pays $2,022 per month as a mortgage payment. Those who rent their homes pay on average $1,132 per month. This high housing expense can be combined with high debt payments to create a very tight financial situation for many area residents. More than that, the per capita income in New York is less than $33,300, giving residents very little wiggle room in their budget. The poverty rate in New York is more than 15 percent, and many others live only slightly above the poverty level. Finding a way to improve your budget by reducing debt is a top goal, and debt consolidation may help.
What Is Debt Consolidation?
Before you can benefit from debt consolidation, you may be wondering what exactly is involved in this process. This is a common method that has already effectively been used by many people who have previously struggled with debt like you. To consolidate debt, you roll your current debt from most or all accounts into a single account, if possible. In some cases, you may need to be creative and use two accounts. The concept is that high interest debt, and especially debt on a revolving term, is rolled into a new loan that has a lower interest rate and a fixed term. By doing so, you are lowering interest payments each month, freeing up more money to be applied toward capital. A fixed term is more effective at debt reduction as well, and it generally results in lower monthly payments. Because you are consolidating multiple debts into a single account, you may find that your overall debt management task is less stressful and easier to do on a monthly basis.
Now that you are more aware of what debt consolidation entails, you may be wondering if this is the right strategy for you to use. Debt consolidation may use a loan that you already have in place, such as an existing home equity line of credit. However, more commonly, individuals who wish to consolidate existing debt need to apply for a new loan. Because of this, you may need to have decent or good credit scores to qualify for a new loan. The typical debt consolidation loan is an unsecured installment loan from a bank, a second mortgage, a home equity loan or even a refinance loan on a car or a boat. There are many methods that you can use to consolidate debts, and this provides you with great flexibility to set up the loan that is right for you. If you do not qualify for a new loan, however, you may seek debt relief through debt settlement or bankruptcy.
What Do Debt Relief Laws in New York Say?
The state has taken significant steps to protect consumers against harassment from creditors, and there are several laws in place that your attorney can tell you about if you are being harassed. In addition, the state has established numerous laws regarding consumer finance and debt, including those for bankruptcy, repossession and foreclosure. Debt consolidation is a matter of refinancing existing debt, so it falls under the category of consumer finance. Provided you select a legal loan format to use for your debt consolidation and you pay your debt off in full, you will be abiding by the law in New York.
If you have been struggling with a high debt balance, you understandably want to find an effective way to overcome your burdensome situation. Debt may be preventing you from taking a much-needed vacation, buying new furniture for your house, saving for retirement and more. If you would like to improve your financial situation, restructuring your debt through consolidation may be a great option to consider. Because this option does not have the negative impact on a credit rating that bankruptcy and debt settlement have, it typically is considered as a first step.