Louisiana consumers with exceptionally high amounts of debt or those who are unable to manage monthly payments because of difficult financial circumstances may consider different ways to deal with their debt. One of these options is debt consolidation. This allows a consumer to reduce the number of payments each month, and it may save money on interest. While a beneficial option in some situations, it is prudent to understand the implications of this choice before moving forward.
Debt consolidation is a loan that consolidates other types of loans into one balance. These loans usually offer an interest rate that is lower than the rates associated with credit card and personal loans, ultimately saving the consumer money over time. Instead of having multiple balances, there will be just one, and the borrower will know the date it will be paid off.
In addition to having one payment and a lower interest rate, a consumer may be able to choose the terms of his or her debt consolidation loan. It allows someone struggling financially to have a set plan through which he or she will be able to pay off debt within a certain amount of time. It may also lead to an improvement of credit scores.
Choosing to apply for a debt consolidation loan is a significant step for a Louisiana consumer. Before moving forward, it is typically helpful to speak with an experienced attorney regarding the legal options available and which choice is best for the individual situation. If this type of loan is not the most effective way to deal with debt, a consumer may consider the benefits of bankruptcy.