North Carolina Debt Consolidation Instead of Bankruptcy

Individuals in North Carolina who are faced with mounting debt will want to know what options are available to them. Meeting with a debt consolidation agent may yield the right solutions as many different suggestions can be made to alter debt circumstances. Although bankruptcy is an option, many people are looking for alternatives and debt consolidation is often a more desirable route to becoming debt free. By exploring the benefits of pursuing debt consolidation instead of bankruptcy, consumers can make the choices best suited to their financial needs.

Understanding debt consolidation options

In North Carolina, there are essentially two types of debt consolidation loans you can pursue. These include loans that use your home to secure the terms of the loan and debt consolidation that requires no collateral. A home equity line of credit allows the borrower to use the funds to reduce their current unsecured debt. The consumer debt is then paid off in one lump sum and the home equity line of credit is slowly repaid over time. However the drawback to a home equity line of credit is that if the payments are late or unable to be made, the home may be forfeit.

The alternative to a home equity line of credit is simply getting a loan from a debt consolidation agency. The agency will loan the money to the consumer with one lump payment made monthly. The payment goes towards reducing the amount of the loan as well as paying creditors. Many people choose this option to avoid having to place their home in jeopardy. Although there are many advantages to selecting this path, it is imperative to work with a trusted debt consolidation company. This will ensure that the majority of your payments are going towards your debt and loan amount instead of going towards interest on the loan.

How long does debt consolidation take?

In North Carolina debt consolidation can last from three to five years depending on the specific terms of the loan. This type of plan can also be established by filing for Chapter 13 bankruptcy if bankruptcy proves to be a better financial option. It is important to discuss the details of one’s financial situation in depth with a credit counselor in order to determine what the best options are for your needs.

Is bankruptcy a better choice?

In a Chapter 7 bankruptcy, the home and vehicle may have to be returned under the terms of bankruptcy. However in Chapter 13 these assets can be maintained and a payment plan established for repayment. However many people wish to avoid filing for bankruptcy because of its effect on credit. In this situation, debt consolidation may prove to be a much better choice.

Ultimately, the decision to file for bankruptcy or opt for debt consolidation is a personal one. It is best to consult with a credit professional to receive expert guidance about major financial decisions.