Debt Consolidation in Morristown
Support from Seasoned Debt Relief Attorneys Serving Morris County and Surrounding Areas
Taking out a debt consolidation loan is often considered an effective way to rein in substantial debt while protecting credit scores and avoiding bankruptcy, and lenders are happy to encourage this kind of thinking. While making a single payment each month may seem like an attractive option, the realities of the financial sector make it unrealistic for many of today’s debtors. Those who need to borrow the most are often unable to do so, and taking on new debt to escape existing debt can be a risky strategy.
Our debt relief attorneys at Ast & Schmidt, P.C. have decades of combined experience helping Morris County residents cope with difficult financial situations. We can help you assess all debt relief options at your disposal, and then we can develop a failsafe plan of action to help you accomplish your long-term financial goals.
Navigating the Challenges of Debt Consolidation
Consumers do not generally apply for debt consolidation loans until they have exhausted all other options, which means their credit reports may already contain late payments and other negative marks.
Banks, meanwhile, are often reluctant to provide unsecured personal loans, even to those with excellent credit. Individuals who face financial difficulties may find it impossible to get approved for debt consolidation financing that is not secured by real estate or other assets. This greatly increases the risks involved and makes the possible consequences of future financial setbacks far more severe.
Some debt consolidation companies offer creditors a lump-sum payment if they agree to lower the total debt, but this strategy only works if all creditors are willing to participate. Lenders may also get cold feet and pull out of debt consolidation deals that linger for too long, or they may only agree to a debt reduction if other creditors do so.
Hidden Fees and Unexpected Tax Bills
Debt consolidators do not work for free, and their clients rarely have the resources to pay upfront application and processing costs. They will typically add these sums (and interest) to the financed amount. Consumers who take out this kind of loan should pay particular attention to the total amount they are borrowing and how that figure was determined. Furthermore, because the Internal Revenue Service considers forgiven debt a form of income, debt consolidation can lead to unexpected tax bills.
Finding an Alternative in Bankruptcy
Bankruptcy is highly stigmatized and deeply misunderstood. With the proper preparation and guidance, however, bankruptcy can be the solution you need to your mounting debt. When you file personal bankruptcy, your creditors will have no choice but to participate, and an automatic stay will put an immediate end to collection efforts and creditor harassment. While you may experience a few challenges along the way, the subsequent financial freedom has been well worth the sacrifice for many of our clients, and we want to help you experience the same level of relief.