Consolidation and debt relief for Quincy residents (Part 1)

Many Quincy residents struggling with credit card debt are desperate for solutions. Anything that can help reduce their monthly payments, or even let them make fewer payments, may be considered if it promises some measure of debt relief.

These borrowers are likely the recipients of frequent mailings offering to help wipe out their credit card debt through what's known as consolidation. Consolidation can, in some cases, make paying off credit card debt somewhat easier, but it's important to understand the pros and cons of different forms of consolidation. We'll look at what the Consumer Financial Protection Bureau has to say on this subject, with the understanding that the information is general in nature only and is not intended as specific legal advice.

First of all, we should be clear that consolidation itself does not eliminate debt. Consolidation is merely taking out a new loan to pay off one or more of your old loans. The new consolidation loan may have a lower interest rate than the loan(s) it's replacing, or it may let you make lower monthly payments than you were previously. Those may be helpful benefits, but understand that you're still going to have to pay off the same amount eventually.

We'll continue with a look at options for debt consolidation in a follow-up post. However, if spending more money than you earn is what got you into debt in the first place, a consolidation loan is unlikely to provide a comprehensive answer to your financial struggles. Filing for personal bankruptcy may sound like a drastic step, but it can provide a truly fresh financial start in a way that consolidation typically cannot.

Source: CFPB.gov, "What do I need to know if I'm thinking about consolidating my credit card debt?," accessed on April 20, 2018

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