Secured Debt Consolidation Loan: Your Way Out

If you are heading towards defaulting on your debts, a secured debt consolidation loan may be your way out. You may be like so many others who are feeling the weight of debt upon them. You know you can file bankruptcy but you hope it does not come to that. 

There are several benefits to a secured debt consolidation loan:

  • One payment - If you only have one payment to worry about you may be less likely to miss that payment.

  • Lower interest rate - Typically a secured debt consolidation loan will provide you much lower interest rates and monthly payments.

  • End to harassing phone calls - you will not receive endless calls from creditors if you have one account and you have it paid up to date.

  • Private and discreet - a secured debt consolidation loan will not be public information.
There are some downsides as well to consider:

  • You will need to have collateral such as your home to secure this type of loan. If you default you could risk losing your home.

  • Lower interest rates + longer payments = More interest. By reducing your interest and your payments you extend the period of the loan, in some cases up to as much as 30 years. This extension means that you will pay more interest over the life of the loan.
In some cases, bankruptcy might still be a better way to go. Once you have filed bankruptcy you are not responsible for previous debt if that debt was included in the bankruptcy.

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