Debt is an enigma. Handled property, incurring debt has become an essential part of life in the U.S. and around the world. After all, very few are the number of families or individuals that can afford to buy a home or a car without taking on debt. Where people have to be particularly careful is when they begin taking on credit card and/or personal unsecured debt. That’s when the tables can turn and people find themselves facing serious debt issues.
The Road to Bankruptcy
In the worst of situations, excessive credit card debt has often been the pathway to bankruptcy. For anyone who believes bankruptcy is nothing more than a minor setback, they will soon realize that the consequences can be quite significant for a long period of time. According to data accumulated from the U.S. Bankruptcy Court system, there were over 805,000 bankruptcy filings for the 12-Month Periods Ending September 30, 2016. Additionally, there was a total of 1,164,747 bankruptcy cases with pending status at the end of September 2016. That’s a lot of people facing the prospects of bad credit for 7-10 years. Bad credit can affect one’s ability to make major purchases, secure a job or obtain emergency services.
Credit Card Debt in the U.S.
Considering how many people are dealing with a bankruptcy, it warrants a look at the current credit card debt stats as reported by the Federal Reserve. for the period ended September 30, 2016. Average credit card debt per household stood at over $15,000. When considering that 14.7% of the families in the U.S. had credit card debt that exceeded 40% of their annual income, it becomes increasingly easier to understand why so many families find themselves facing severe financial difficulties.
Debt Consolidation – A Viable Solution for Escalating Debt
The signs pointing toward financial disaster can be subtle. With that said, it is possible to deal with potential problems before they reach uncontrollable levels. As indicated above, bankruptcy is a potential solution, but it comes with tremendous repercussions. The same could be said for debt settlement where advocates acting on behalf of their customers will ask the customer’s creditors for actual debt relief, which also results in restrictive consequences. That leaves debt consolidation as the most viable solution.
Debt consolidation is suitable for individuals who have lots of consumer and personal debt owed to a lot of different creditors. It can be quite tasking to deal with multiple creditors and having to write multiple checks every month. If one’s credit is still in reasonably good shape, there are lenders out there that could be willing to approve a debt consolidation loan through an accredited debt counselor.
The Benefits of Debt Consolidation
In order to be a viable debt solution, any proposed action should offer the indebted individual relief financially, mentally and emotionally. With peace of mind, people can get back to living a normal life without having to hide from creditors. So what exactly are the benefits of debt consolidation?
If a borrower on a debt consolidation loan for bad credit is still able and willing to meet their overall debt obligation, there’s usually very little effect on their credit rating. That’s a great benefit because it keeps certain borrowing options available for emergencies. A debt consolidation loan also provides the borrower with the opportunity to consolidate a number of monthly payments into a single payment, which saves a lot of time and effort. In a lot of situations, a debt consolidation loan will carry an effective interest rate that actually reduces the amount of interest being incurred each month. That translates to a lower overall monthly cash outlay and the option to reduce the outstanding principle balance with larger payments over a shorter period of time.
In a pinch, debt consolidation offers a solid way to avoid debt problems and prevent any undue stress on the individual and/or the family. It may not be a viable solution for people whose debt problems have already adversely affected their credit rating, but it is a viable solution for those people who just need a little boost to help them get back on track.