Debt Consolidation in Los Angeles - Everything you need to know!
Debt consolidation is a financial strategy that allows people to settle their accumulated payment obligations effectively. In the city of Los Angeles, it can be a viable solution for those looking to simplify their payments and even improve their financial situation.
What is debt consolidation?
Debt consolidation is the administrative process by which multiple debts are combined into one for their reduction or elimination. In other words, instead of making separate payments to different creditors, debtors resort to programs to unify these debts, such as several credit cards and even personal loans, in order to make a single payment. In this way, it is possible to reduce both monthly payments and interest.
Three steps to consolidate your debts
The process of carrying out a debt consolidation in Los Angeles consists of three simple steps:
- Record all outstanding debts to pay, it is also necessary to study the possible loans that you can request.
- Estimate the total to be paid: at this point, you must add the amount for interest, as well as the remaining money to be paid.
- Select a form of debt consolidation to later begin to fulfill it.
Common methods to obtain a debt consolidation
There are various methods of debt consolidation in Los Angeles. Among them, the following stand out:
Personal loan: you can use this method to pay off all the debts you have, especially if they have high interest rates. To use this method, you must apply for a personal loan whose amount is equivalent to the total amount you must pay off. Then, you will receive the corresponding funds with which you must make a single payment to consolidate these debts. Once covered, it will be necessary to continue paying the requested loan for a period of time established by consensus by the creditor and by yourself as well.
Home equity loan: it is also known as a home equity line of credit. If you apply for this type of loan, you will have the possibility of paying off your debts through a loan whose amount is equivalent to the value of your home. Generally, the payment of this type of loan is usually made over a longer period of time with low interest rates, which is why it is a competent option to pay off high debts.
Balance transfer: as its name indicates, this option consists of moving the balance from one credit card to another with the aim of saving money on interest. To use this method correctly, the money will need to be moved from a card with a high Annual Percentage Rate (APR) to one with a lower APR. To do this, you can ask your bank to transfer it to an existing credit card with a 0% APR or arrange for a new credit card with a low introductory APR to be transferred over the next 12 to 18 months, allowing you to pay off your debt while paying less interest.
When to resort to debt consolidation?
You can use this resource on two occasions:
If you want to save on interest: debt consolidation can help you when you want to pay less interest, although it is recommended to be alert when carrying out the negotiation, because low interest rates will not always be found.
If you have difficulties when paying debts: if taking care of your debts is complicated for you, it may be time to resort to debt consolidation. When you apply for a loan, consider the possibility of summarizing all your accounts payable into one, although this is an advantage, remember that the term to amortize the financing will be longer, so you must take your precautions in this regard.
When is it not advisable to carry out this procedure?
Debt consolidation is a method capable of bringing benefits in certain scenarios, however, there are some exceptions:
- If the debts can be paid in one year or less.
- When you cannot commit to making the payments within the established time.
- In case the amount owed does not exceed half of your income.
What is better: Going bankrupt or consolidating debts?
Many people have often asked themselves: What is the best option to consolidate debts? Basically, the answer will depend on the situation you are in, although experts assure you that debt consolidation is a better option because it does not affect the credit score. If you want more information, you can visit a lawyer who specializes in debt and bankruptcy, only he can help you make a better decision.
At S&B Legal we do not provide debt consolidation services, but in the same way, we are fully capable of helping you with your bankruptcy problem through chapters 7, 11, and 13. Below, we proceed to briefly explain how we can support you:
Chapter 7 bankruptcy: in case of declaring bankruptcy under this chapter, there is the possibility that the debt can be eliminated, but it is necessary to pass the resources test first.
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Chapter 11 Bankruptcy: This is an ideal protection measure for large, medium or small businesses and associations. Through this chapter of the bankruptcy law, companies have the opportunity to reorganize their debts so that their work and interests are not harmed.
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Chapter 13 Bankruptcy: Through this regulation, you can choose to reduce the balance of your loan, as well as eliminate second or third mortgages. Likewise, the citizen can keep his property, although he will have to pay his creditors an amount similar to the price of the property.
Bankruptcy problems?
Remember, if you have bankruptcy problems, do not hesitate to immediately turn to the S&B Legal law firm. Contact us today at (760) 302-4652 to schedule an appointment and start discussing your case!
