Debt Consolidation Attorney in Portland, Oregon
Debt consolidation is the process of combining multiple debts with high-interest rates into a single payment under the new consolidation loan or balance transfer credit card. You may choose to consolidate debt if you have several loans or lines of credit to repay.
With debt consolidation, you take out a single loan to pay off multiple debts. It aims to reduce the total number of creditors that you owe. Consolidating your debts allows you to lower your interest rate and get a reduced monthly payment amount. If you’re dealing with a manageable amount of debt and just want to reorganize multiple bills with different interest rates, payments, and due dates, then debt consolidation can help you.
If you’re considering debt consolidation, call us today at Michael D. O’Brien & Associates, P.C. by dialing (503) 694-4445 and schedule a case evaluation. Our reliable Portland bankruptcy lawyers can help you understand the advantages and disadvantages of this debt-relief program.
What are the Types of Debt Consolidation?
Debt consolidation is the process of using different forms of financing to pay off one’s debts and liabilities. A credible debt consolidation attorney in Portland can help you understand and develop the best possible debt consolidation strategy to improve your financial situation. To consolidate your debt, you get a single loan to pay off your other loans, leaving you to make just one payment to a single creditor.
There are two broad types of debt consolidation loans: secured and unsecured loans.
A secured debt or secured loan requires you to offer something you own of value as collateral, in case you cannot pay your debt. Secured loans are backed by one of the borrower’s assets as collateral, such as a house or a car. It comes in multiple forms such as home mortgage loans, car loans, and secured credit cards. You have several options for debt consolidation using a secured loan. You can refinance your house, get a home equity line of credit, take out an auto loan, or apply for a second mortgage.
Generally, secured loans have lower interest rates compared to unsecured loans. Therefore, you may save money on interest payments by consolidating through a secured loan. Getting a lower interest rate will make your monthly payment more affordable. Secured loans are usually easier to obtain than unsecured loans because they carry less risk for the creditor.
In case you can’t pay back the loan and miss the monthly payments, your credit score will be affected and the loan company can repossess and sell your property such as car, house, life insurance, or retirement fund.
An unsecured loan is also known as a personal loan. It is a type of loan that is not backed by assets and can be more difficult to obtain. It means you take out new credit to pay off debts without any assets, or collateral, being linked to the loan. They also tend to have higher interest rates and lower qualifying amounts.
The interest rates may vary based on your credit history. If you have a poor credit history, it’s likely the interest rates will be higher. Although the interest rate and monthly payment may be lower on a debt consolidation loan, it’s important to focus on the payment schedule. Longer payment schedules mean paying a higher interest rate.
Is Debt Consolidation Right for You?
Debt consolidation helps people who have multiple debts with high-interest rates or monthly payments. When you consolidate debt, you no longer have to worry about multiple due dates each month because you only have one payment. However, this debt-relief option may not work for everyone.
There are certain factors that you need to consider before consolidating your debt. A knowledgeable bankruptcy attorney in Oregon can help you determine whether debt consolidation is right for you.
- You must have a steady income to be able to pay the new monthly payment on the loan.
- You must get a lower interest rate.
- You should pay attention to the length of the repayment term to reduce interest payment.
Before consolidating your debt, you must review all of your current monthly minimum payments and the expected length of time to repay the debt and compare that to the time and expense associated with a consolidation loan.
How Do You Consolidate a Debt?
Debt consolidation can help you reduce your total debt and reorganize it so you can pay it off faster. When you consolidate your debt, it is advisable to seek legal help from a skilled Portland bankruptcy lawyer to help you throughout the process. There are two ways on how to consolidate debt into one monthly bill:
Acquire a fixed-rate debt consolidation loan
You can use the money from the loan to pay your bills and debts, then pay back the loan in installments over a set term. Various financial institutions (banks, credit unions, and online lenders) offer consolidation loans and all of your debt payments are made to the new lender moving forward. This will help you reduce your total debt and reorganize your finances so you can pay it off faster. For instance, you may use a personal loan to consolidate debt from multiple credit cards.
Use a balance-transfer credit card
Another option for credit card debt relief is through balance transfers. In this case, you’d open a new credit card account, ideally at a low or 0% annual percentage rate, then transfer your existing balances to this card.
What are the Debt Consolidation Alternatives?
While a debt consolidation loan is an excellent tool to help you gain control over your debt, it might not be the perfect solution for everyone. Several debt consolidation alternatives exist, and if you’re considering debt consolidation, you should know what these other options are, as well as the advantages and disadvantages of each debt management solution.
If debt consolidation doesn’t work for you, there are alternatives to address the problem, but most come with negative impacts, particularly to your credit score. A competent Oregon debt consolidation lawyer can help you choose the best debt management solution depending on your financial situation.
- make a budget that can help you keep up on your debt obligations
- contact your creditors to arrange a solution (reduced interest rate, a lower minimum payment, or the removal of late penalties)
- settle your debts for less than you owe on your own
- enter into a legitimate debt management plan
- declare bankruptcy
Hire a Debt Consolidation Lawyer Today!
If you’re facing a huge pile of debt, there are several ways to relieve your financial burden. It is important to know how the different debt relief options work and how they can help you solve your financial problems.
Debt consolidation allows you to repay debt faster, simplify finances, get lower interest rates, have a fixed repayment schedule, and boost credit. However, keep in mind that this debt-relief option does not guarantee that you won’t go into debt again. Understanding the advantages and disadvantages of debt consolidation is critical for choosing the right solution.
If you are considering debt consolidation, you’re probably feeling stressed and overwhelmed. To ease your burden, you may seek legal help from our experienced Portland bankruptcy lawyers at Michael D. O’Brien & Associates, P.C. Our bankruptcy law firm can help you evaluate the different debt-relief programs and find one that best fits your situation.