After the holiday period, many people find themselves in considerable amounts of debt. It may be that you have been ignoring your credit card bills in the last couple of months, and now that the new year has come around, you are regretting the decisions that you made.
While you may feel that your situation is hopeless, there are many ways that you can address the situation. One of them is through debt consolidation. This is the act of combining your debts into one debt that is ideally subject to lower interest rates.
How does debt consolidation work?
Debt consolidation is often a great choice for those who have significant credit card debts. This is because unpaid credit card debts often have high-interest rates associated with them. Therefore, by taking out a lower interest loan to cover these debts, you may be able to manage your debts more easily and afford repayments.
What are the alternatives to debt consolidation?
If you believe that you would struggle to get a loan or if you think that you have too many unpaid debts to make debt consolidation a reality, you may want to consider bankruptcy. Chapter 13 bankruptcy works similarly to debt consolidation. It first stops creditors from being able to continue in their debt collection efforts. Then, it involves the reorganization of debts into a more manageable repayment plan so that you can pay off your debts in a way that is realistic for you.
If you are worried about the debts you have accumulated over recent months, you mustn’t delay action because in doing so, the situation could become much worse.