Clicky

Select Page

The stress of financial challenges is unfortunately common for residents in Tennessee. Many people feel challenged by a lack of funds from time to time, and others are relying on credit cards to make ends meet on a monthly basis. For most people, unexpected expenses related to broken appliances, a car accident, a serious illness or other similar issues can arise periodically, and such issues can make your debt level increase drastically. If you are struggling with your debt level in Tennessee, you may be wondering if debt consolidation is an effective way to find relief from your financial stress. With a closer look, you can learn more about debt consolidation and can make a more educated decision about how to handle your finances.

 Personal Debt in Tennessee

Tennessee has a diverse population and a great economic base. Many have worked hard to achieve financial security, but many other hardworking individuals are barely getting by each month. A closer look at personal finances in Tennessee can be revealing. According to the U.S. Census Bureau, the average homeowner pays approximately $1,181 as a monthly mortgage payment, and renters pay $764 in rent. The per capita income throughout the state is barely above $25,000 per year, and more than 16 percent of residents live below the poverty line. Many other residents in Tennessee live just above the poverty line. Even those who have a seemingly comfortable income level may have high debt balances that can cause a stressful living situation. With this in mind, you may be looking at debt consolidation as a possible solution for your financial issues.

What Is Debt Consolidation?

Before you actively pursue debt consolidation to solve your financial problems, you need to understand what it is and what it can accomplish for you. The only way to erase debt is to file for bankruptcy or to negotiate with your creditors. Both can have a tremendous detrimental impact on your credit scores. Debt consolidation will not erase your debt, but it can reduce your monthly payments through a lower interest rate, a more attractive term or both. In addition, you may be able to structure your payments so that each payment more effectively reduces your debt balance. The goal is to refinance two or more accounts into a lower interest loan with a fixed term. You may be able to apply for a consolidation loan through a local bank or a lender. Some people who have equity in their homes will use a second lien or home equity loan to consolidate debts.

What Are the Benefits of Debt Consolidation?

One of the most significant benefits associated with debt consolidation in Tennessee is that you may be able to restructure your debt so that it is manageable without negatively affecting your credit score. Through an installment loan, you could obtain a lower interest rate, and this can result in lower monthly payments and more of each payment being applied to principal reduction for faster debt repayment. In addition, you may even be able to set up a final debt repayment date that gives you a goal to shoot for. For example, if you roll all of your debt into a five-year installment loan, you could be debt-free within five years. This can give those who feel they are in a hopeless debt situation something to look forward to.

Who Can Benefit From Debt Consolidation?

Debt consolidation is an option for anyone who has a suitable enough credit rating to qualify for a new loan. If your credit scores are severely damaged by your debt situation, debt negotiation or bankruptcy may be your best options. Debt consolidation is also best for individuals who have multiple accounts with a high interest rate and who are struggling to make the minimum monthly payment each month. Some will use equity from their home, but home equity is not the only option. For example, you could also refinance your car to obtain a consolidation loan, or you could apply for an unsecured loan if you have decent credit scores.

What Are the Debt Relief Laws in Tennessee?

Before you apply for a debt consolidation loan, you may be wondering what the debt relief laws are in this state. Like other states, Tennessee allows those who are struggling financially to pursue various forms of debt relief. The state has firm laws in place regarding debt settlement through negotiations as well as regarding bankruptcy. If you are thinking about pursuing these options, it may be wise to consult with an attorney before proceeding. Debt relief laws generally allow consumers to pursue consolidation through any legal form of financing available, such as installment loans or home equity loans.

When you are burdened by a stressful debt situation, you may be looking for any form of debt relief you can find. While there are several options to consider, debt consolidation may be an effective option for many people. Because this option does not negatively affect your credit rating, it may be a good option to consider as a first step.