Consolidating debts pros cons

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If you’re like most folks who carry multiple credit cards, the merry go round of payments is a monthly frustration and chances are good you’ll eventually face problems making your deadlines.

Nearly half of America’s households carry a balance from month-to-month and the amount they owe is growing.

If you fell into debt for a specific reason, like a medical bill, or you lacked financial discipline that you are now committed to maintaining, consolidation is a good alternative.

Consolidating your debts and paying on time can improve your credit score in a relatively short time.

Also remember that bankruptcy severely damages you credit score and makes it difficult to borrow money or buy a home for years after the case is resolved.

Debt consolidation can be a good option if it offers a clear path to financial stability.

It requires that you repay non-discharged debts over three to five years, usually through a single monthly payment to an administrator. Both types of bankruptcy eliminate unsecured debts and halt foreclosures, repossessions, wage garnishments, debt collection efforts and utility shut offs.

Some of your property might be exempt from the process, depending on your state’s laws.

Though Chapter 13 bankruptcy allows you to keep your house in some cases, it doesn’t prevent a creditor from seizing it for an unpaid mortgage or lien.The alternative, bankruptcy, seeks court protection from creditors and can either discharge debt or reduce it with a payment plan that can take up to five years to complete.Debt consolidation is a strategy to reduce the interest rate and lower the monthly payment on credit card bills by combining them into a single payment.The average family that carries a balance owes ,094 in credit card debt, which helps explain why the Federal Reserve said card debt hit a record 0 billion at the start of 2019.Delinquencies – payments that are more than 90 days late – also rose to 3.22% at the end of 2018 and the credit reports of about 37 million cardholders were dinged because of it.

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