Comprehensive Guide to Debt Consolidation in Illinois

Here’s the comprehensive guide to Debt Consolidation in Illinois if you feel overwhelmed by the multiple debts that bother you. Do you have credit card debts and student loans? The burden of high-interest debts can be daunting, but take heart because there is an available solution: debt consolidation.

What is debt consolidation?

Debt consolidation is a plan of action that can help you combine multiple debts and make them into a single and manageable payment.  Imagine several loose threads entangled into a mess being transformed into one intertwined rope – that is what debt consolidation is about. The question is, is this the right option for you? Here are three crucial points to help you with your decision:

1. Debt consolidation. There are two ways to consolidate your debts. One way is through a debt consolidation loan. This is a personal loan that can be used to pay off your existing debts. Then, you make one monthly payment for this new loan. You want to get a loan with a lower interest rate than your current debts. This will help you save money as you accelerate your debt repayment.  The other way is enrolling in a debt management plan with a credit counseling agency. The agency will represent you and negotiate with your creditors to request a monthly payment and interest rate reduction. You also make a monthly payment, but this time, you give it to the agency, who will, in turn, distribute it among your creditors.
2. Commitment. Debt consolidation is a long-term strategy. If you are looking for a quick fix solution, this is not it. You need to be disciplined in repaying, must have a steady flow of income and willing to wait. Debt consolidation will simplify your payment scheme and could potentially save you money but it will take time. Patience is key.
3. Potential consequences. Debt consolidation may lower your credit score and with consistent timely payments it can recover and improve. Choose a reputable company if you want to pursue this way of getting out of debt. Sadly, there are companies who take advantage of people who are already deep in debt so look for their accreditation from the Financial Counseling Association of America or the National Foundation for Credit Counseling.

Time to take back control of your finances!