It is easy for a Pennsylvania consumer to be overwhelmed by credit card debt. A few missed payments or an extended period of time just paying minimum payments can ultimately result in a balance that someone may not be able to manage on his or her own. This can lead to serious financial problems, and either debt consolidation or Chapter 7 bankruptcy may be a good way to confront these matters.
Debt consolidation loans are personal loans that allow a person to consolidate all credit card balances into one payment. Not only can this lead to smaller payments each month, it can also help save money on interest. Data indicates that credit card holders were charged an average of 16% interest on their balances in the first few months of 2020.
The interest on consolidation loans is typically much lower, allowing a consumer to catch up and regain financial control over credit card debt. This is sometimes a beneficial option, but it is crucial to look at the fine print for the terms of the loan, potential interest rate increases and other things that may cause problems later. Every situation is different, and all factors should be considered before moving forward.
If a consolidation loan is not the best choice, Chapter 7 bankruptcy could be. This option could allow a Pennsylvania consumer to deal with certain types of unsecured balances once and for all, not just credit card debt. An assessment of the individual situation can help a consumer understand all of the options available and choose the most appropriate option for his or her future.