4 Questions to Ask Yourself When Considering Debt Consolidation

September 20, 2015

When facing overwhelming debt, one option for relief can be a debt consolidation loan, which essentially combines a number of debt payments into a single loan payment, usually with a home (or other substantial property) being used as collateral.

While there can be various pros and cons to debt consolidation, depending on people’s situation, asking the following questions before pursuing this debt relief option can be the key to determining whether it’s a good debt relief solution for someone – or whether that person may be better served pursuing another option, such as debt settlement or even bankruptcy.

Before Pursuing Debt Consolidation, Ask Yourself…

1 – Can I afford to make the monthly debt payments?

Thinking about taking out a debt consolidation loan? Ask these questions first to find your best option, a Colorado Springs bankruptcy attorney explains.

Thinking about taking out a debt consolidation loan? Ask these questions first to find your best option, a Colorado Springs bankruptcy attorney explains.

This is certainly the first question to ask when considering taking out a debt consolidation loan because if you won’t be able to make the monthly payments, you absolutely should not take out this loan. In fact, when evaluating your ability to pay off this loan, it’s also important to consider:

  • The reliability of your income – Can you rely on earning a certain amount per month? Or does your income fluctuate month to month? If you cannot rely on having a certain amount of income month to month, you may want to think about other debt relief options because this one could end up hurting you more than it may help you.
  • The term of the loan – These loans can have long terms, and you’ll need to be committed to making all of the payments for the full term (otherwise you face the risk of losing the collateral you have offered up for the loan).

2 – Am I aware of all of the fees for the loan?

This includes both the fees for taking out the loan (e.g., application fees), as well as other ongoing fees that can be assessed for things like balance transfers, late payments, etc.

These fees can add up over time, hiking up your monthly payments. So, you need to be aware of what the true costs of the loan will be for you so that you can accurately assess whether it’s a viable option.

3 – Is the debt consolidation loan offer too good to be true?

Be skeptical of the “too-good-to-be-true” offers, as the debt consolidation industry can be home to unscrupulous lenders and offers that seem too perfect  – and that are often scams that will hurt borrowers.

4 – Have I considered the potential benefits of alternative debt relief options?

Specifically, have you considered debt settlement and/or bankruptcy? Either of these can be viable debt relief solutions, and they both can offer more advantages than debt consolidation in certain cases.

Contact a Colorado Springs Bankruptcy Attorney at the Law Office of Jon B. Clarke, P.C.

Are you struggling with debt and ready for a financial fresh start? If so, it’s time to contact a trusted Colorado Springs bankruptcy attorney at the Law Office of Jon B. Clarke, P.C.

To find out more about your best debt relief options, as well as how we can help you obtain the financial fresh start you need and deserve, contact us today by calling (303) 779-0600 or by emailing us using the contact form on this page. We also encourage you to complete our Business or Consumer Debtor Analysis Form so that we can provide you with professional advice that is as specific and helpful as possible.

From our offices based in Denver and Greenwood Village, we provide people throughout Colorado with the highest quality debt relief legal services.

Categories: Alternatives to Bankruptcy