You've been struggling to pay off that mountain of debt for years now and, thanks to the current economic climate, things aren't getting any better. If you want to dump that toxic debt so you can move on with your financial future, then you might think that debt consolidation loans can offer you that much-needed relief from the endless sludge pile of bills. However, consolidation loans come with their own secret traps and pitfalls - ones that can wind up costing you your credit if you're not careful.
So how do you know when you should apply for a consolidation loan - and when you should declare bankruptcy? Here is the rundown that consolidation loan lenders don't want you to know about!
If a lender asks you to consider:
A Home Equity Loan...You have plenty of equity in your home and you're not planning on moving for some time. Home equity loans are typically tax-deductible and also offer lower interest rates than most private loans. Run for the hills if lenders ask you to put your home up as collateral, as you could stand a good chance of losing your house should you fall behind on payments.
A 401(k) Loan If... You have plenty in your 401(k) account and your job looks to be stable over the next five years. Many employers offer the option to take out up to half of the amount in your 401(k) and pay it back over the next five years at relatively low interest rates. None of us can predict the future and losing your employment could spell disaster as your former employer might demand immediate repayment of the entire loan.
An Unsecured Loan From A Lender If...Here's a little insider secret: you run the risk of being asked to close your credit cards once you sign on the dotted line for the loan. While lenders might require you to do this simply to avoid running up even more debt, closing your credit card accounts could severely impact your credit score. Give serious thought to whether this option is worth the hassle.
If the very idea of taking on more debt is more than you can handle, then it might be time to declare bankruptcy. Declaring bankruptcy isn't synonymous to declaring defeat - in fact, far from it. Declaring bankruptcy can give you the fresh start you need to regain control of your finances again, especially if you've been struggling with significant debt for some time now.
Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.
By Reed Allmand
So how do you know when you should apply for a consolidation loan - and when you should declare bankruptcy? Here is the rundown that consolidation loan lenders don't want you to know about!
If a lender asks you to consider:
A Home Equity Loan...You have plenty of equity in your home and you're not planning on moving for some time. Home equity loans are typically tax-deductible and also offer lower interest rates than most private loans. Run for the hills if lenders ask you to put your home up as collateral, as you could stand a good chance of losing your house should you fall behind on payments.
A 401(k) Loan If... You have plenty in your 401(k) account and your job looks to be stable over the next five years. Many employers offer the option to take out up to half of the amount in your 401(k) and pay it back over the next five years at relatively low interest rates. None of us can predict the future and losing your employment could spell disaster as your former employer might demand immediate repayment of the entire loan.
An Unsecured Loan From A Lender If...Here's a little insider secret: you run the risk of being asked to close your credit cards once you sign on the dotted line for the loan. While lenders might require you to do this simply to avoid running up even more debt, closing your credit card accounts could severely impact your credit score. Give serious thought to whether this option is worth the hassle.
If the very idea of taking on more debt is more than you can handle, then it might be time to declare bankruptcy. Declaring bankruptcy isn't synonymous to declaring defeat - in fact, far from it. Declaring bankruptcy can give you the fresh start you need to regain control of your finances again, especially if you've been struggling with significant debt for some time now.
Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.
By Reed Allmand
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