My boyfriend has a lot of credit card debt – 35000$$!! We are trying to get a hold of this. Is it a good idea to get a bank loan to consolidate this debt??
Any advice is appreciated!
Is it a good idea to consolidate debt?
November 9, 2009 By 2 Comments
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no. he will continue to use cards and run balances up again. then he will have bank debt and credit card debt.
have him call a credit counselor to help reduce rates on cards.
Debt consolidation typically involves converting unsecured debt (credit cards, student loans, medical bills, etc) into secured debt. The reason the interest rate is lower is because the lender has less risk because you put up an asset as collateral. Most experts would NOT recommend this.
If you are fine financially but just are looking to lower your payments you are probably best off talking to a non-profit consumer counseling agency (CCCS). It will hurt your credit and often lengthen your loan terms but they will negotiate new terms with your creditors that will lower your monthly payments.
If you are in a bad financial position you may consider debt settlement. In debt settlement you settle your debts for 40-60% of their balance and typically pay that off over 24-36 months. This will REALLY hurt your credit and put you through dealing with collection actions but is often the only alternative to bankruptcy.