If you’re looking for a simple and effective solution to debt, St. Petersburg FL debt consolidation could be a great option. In addition to having and sticking to a debt repayment plan, consolidation makes payments simpler and often less costly. In this post, we discuss the various options for debt consolidation in St. Petersburg FL as well as other debt relief options.
What is Debt Consolidation?
Consolidating debt means reorganizing multiple debts into a single bill. St. Petersburg FL debt consolidation entails getting a big loan to repay all their smaller debts. Whichever way you achieve this, all consolidation options aim at eliminating the need to write several checks to different creditors every other month. In addition to streamlining debt repayment, bundling your debts into one bill could help you save on interest charges.
Apart from student loans, mortgages, and auto loans – which make up a big part of household debt in St. Petersburg – other unsecured debts like credit card bills and medical bills can be consolidated. Before consolidating your debts, you’ll need to crunch some numbers to establish your monthly incomes, expenses, and what you can comfortably set aside for debt repayment.
St. Petersburg FL Debt Consolidation Options
Various debt consolidation options let you make a one-time payment to all your creditors and then focus on paying down one debt over a given period. Here’s a breakdown of available consolidation options and how they are applied.
Debt Consolidation Loans
A common way of consolidating debt is taking out a huge loan to repay all your creditors. Debt consolidation loans could be personal loans from banks or credit unions or loans for family and friends. These can then be paid over a long period, sometimes up to five years.
The best consolidation loans will come at lower interest rates than your existing debts. That enables you to pay off all your high-interest debts and focus on paying a single, lower-interest loan. Here’s the catch – you’ll need a good to excellent credit score to qualify for lower interest rates.
For a homeowner in St. Petersburg, FL, another way to consolidate debt is taking out a home equity loan against the usable equity in their home. Another option for a homeowner is getting a home equity line of credit (HELOC) – a line of credit from which one can draw up to a certain maximum.
These options present homeowners with substantial amounts enough to repay their unsecured debts. However, the bank may foreclose on your house if you don’t keep up with your loan repayments.
Perhaps the easiest and less costly way of doing Saint Petersburg debt consolidation is using a loan from family or friends. Such loans often come with desirable terms, including little or no interest and a reasonable repayment term.
Credit Card Balance Transfer
Saint Petersburg credit card consolidation can be done by doing a credit card balance transfer. Credit cardholders who carry multiple cards may struggle to pay down their balances, especially those with high interest rates. You could save on interest charges and focus on paying down one bill by moving various debts to a low-interest credit card.
By offering balance transfer credit cards, companies give cardholders a zero-interest introductory period over which no interest charges are incurred. As such, credit card balance transfers can be money savers if you can pay off your balance within the introductory. Otherwise, any unpaid amount will be subject to the prevailing APR.
Debt Management Plan (DMP)
You can enroll in a debt management program if you want to consolidate debt in Saint Petersburg FL without taking out a loan. Debt management plans are offered by credit counseling agencies at a fee and help streamline debt payment.
St. Petersburg FL debt consolidation through a DMP helps individuals shift the burden of tracking payment dates and dealing with creditors to the credit counseling agency. Before enrolling in a DMP, a credit counselor will assess your financial situation to determine your ability to make monthly payments.
You can also get the interest on your outstanding debt reduced by your creditors through debt management. However, creditors aren’t obliged to grant your request, and a reduction in interest rates isn’t guaranteed. With a DMP, you make a single monthly payment to your agency, which in turn makes payments to your creditors.
Other Debt Relief Options in St. Petersburg FL
St. Petersburg debt consolidation isn’t the only way individuals can achieve debt relief. If consolidation is not a good fit, you could explore the following options.
Debt Settlement
Individuals swamped with debts may not have the resources necessary to make monthly payments on their debts. By negotiating with their creditors, such people can settle their debts for less than they owe by making a lump-sum payment.
Saint Petersburg debt settlement is best suited to individuals with many late or skipped monthly payments and probably collection accounts. In most cases, a creditor or collector would accept less than you owe if they believe you are not in a position to pay the original amount.
While debt settlement stops all collection activities, it harms your credit. Worse yet, it could take several years before reaching a settlement agreement with your creditors. Also, it can be costly if you work with a debt settlement company as you’ll pay fees.
Bankruptcy
If St. Petersburg FL debt consolidation and other debt relief options aren’t suitable for you, you might consider filing for bankruptcy. You can have all your unsecured debts wiped out by filing for Chapter 7 bankruptcy. On the other hand, filing for Chapter 13 bankruptcy creates a three-to-five-year plan for repaying your debts.
While filing for bankruptcy can hand you a clean slate by ridding your unsecured debts and stopping debt collection activities, it reduces your creditworthiness and shows up on your credit report for up to ten years. As such, you should only consider filing for bankruptcy when all else fails.
Bottom Line
If your monthly income can support payments on your debts, St. Petersburg FL debt consolidation could help you become debt-free in a few years. Financial experts can also assist individuals juggling multiple payments by creating a payment plan. Debt relief options such as debt settlement and bankruptcy should be the last resort as they can have severe repercussions on your credit.