Debt consolidation loans and credit card debt

Some Florida residents who have high credit card balances consider getting consolidation loans to pay off those obligations. While this may work for some people, others find themselves in much worse financial shape afterwards. The issue is that some people end up running up their credit card balances again, and they are then left with both the loan payments as well as the credit card debts.

People who decide to get debt consolidation loans should understand that they will need to change their spending habits in order to make them work. They might want to consider not carrying their cards and not using them, storing them at home in a safe location instead. In an Indiana survey, 87.5 percent of the respondents who obtained debt consolidation loans had incurred additional credit card debt within a year, placing them in worse financial conditions.

Another study found that debt consolidation loans did not lessen the likelihood that people would need to file for bankruptcy. There were no differences between the rate of bankruptcy filings among people who got the loans and those who did not.

In some cases, filing for bankruptcy may be a better choice than getting a debt consolidation loan. While it is true that filing for personal bankruptcy will result in an immediate hit to a person’s credit score, it has several advantages. It puts an end to creditor harassment and collection activities while offering a debtor a chance to make a fresh financial start. There are several eligibility requirements for Chapter 7 and Chapter 13 that a lawyer can explain.