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Debt Consolidation in Huntsville, Texas: 5 Potential Drawbacks

Don’t go into this blindly. Even if consolidation of your debt sounds perfect for you, the only way you can arrive at the best decision is to go over its cons. Focusing only on the pros may not provide an accurate view of what to expect and what may happen. Here are the drawbacks you should be prepared for.

Debt Consolidation in Huntsville Texas

Added Costs

When you secure a loan for debt consolidation in Huntsville, Texas, you may need to pay several fees, like transfer fees and other costs. That shouldn’t be a problem, though, if you’re aware of those costs beforehand and you save money in the long run.

Higher Interest Rate

This is a definite drawback if you want to get a loan for debt consolidation in Huntsville, Texas. A higher interest rate essentially cancels one of the best benefits that you get from consolidating your debt. In some cases, it may no longer be worth it to proceed. You may want to look at another option such as credit counseling.

Credit Score Damage

If you miss a payment or two with your debt consolidation loan, that could land you in hot water. However, it should be easier to pay one monthly payment compared to several small payments. You may need to pay more for additional fees. You’ll want to review your budget and make sure you have enough to cover those costs.

Doesn’t Solve Underlying Issues

You are still in debt. That won’t change. If you’re thinking about getting a debt consolidation loan because it will make the debts disappear, it won’t. Understanding how it works will help you determine if it’s the best strategy for you. If it doesn’t address your financial needs, though, it might be time to consider other options. If you have a debt consolidation loan and then re-load your credit cards, you will be in worse financial shape. Also, you will need a very high credit score and a good debt-to-income ratio in order to obtain a debt consolidating loan.

Encourages Spending

Some borrowers find themselves tempted when the proceeds from the loan are deposited into their accounts. They start thinking about using the money without paying off their multiple debts first. Don’t let that happen. When the money arrives, pay your loans right away.

Consider Credit Counseling, Debt Settlement, or Bankruptcy

Credit counseling allows you to consolidate your existing credit card debt and make one monthly payment to the credit counselor. Your creditors will accept payment from the credit counselor with lower interest rates than you may be currently paying. Debt settlement also allows you to make one program payment, but your creditors are not paid monthly. Instead, your creditors are settled one at a time throughout the course of the program for less than the full balance. Bankruptcy chapter 7 could help you to not pay back our unsecured debt if you qualify. Otherwise, a chapter 13 repayment plan could be an option. You will need to see a Texas bankruptcy attorney if you wish to look at this option. It is possible in some situations a debt settlement program will be more affordable than chapter 13, but you would need to compare the options.

How to Receive Debt Consolidation in Huntsville, Texas

The fastest way to get help is to call to speak with a Texas Debt Specialist now. You may also fill out the form above and one of our Texas Debt Specialists will reach out to provide you with a free and no-obligation consultation for Debt Relief or Debt Consolidation in Huntsville, Texas.

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Debt Consolidation Huntsville, Texas, Credit Counseling Huntsville, Texas, and Debt Relief Huntsville, Texas Consultations are Free of Charge with no obligation. Affordable Debt Consolidation is not a lender but offers a platform to receive offers from participating lenders.  Credit counseling clients generally obtain an interest rate between 6% and 11%.  Debt negotiation clients who make their scheduled monthly program payments generally experience approximately a 45% reduction of their enrolled balance before fees over a 24-48 month period, not including any optional and separate services such as legal services provided by a law firm.  Our settlement fees are 15% of the enrolled balance compared to 25% charged by most competitors. Individual results vary based on the ability to fund the program, and the creditors enrolled. Statements made are examples of past performance and are not intended to guarantee that your balances will be reduced by a specific amount or that you will resolve debt within a specific time period. Settlement fees are not charged until a debt is reduced and payment has been made to the creditor. We do not assume consumer debt, make monthly payments, or provide tax or legal advice. We are not a credit repair firm. Please contact a tax professional to discuss any possible tax consequences of paying less than the total balance. Debt Relief programs are exclusively offered to Texas residents. Logos used are property of their respective owners.

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