Are Personal Loans a Good Choice for Debt Relief?

Personal Loans for Debt Relief

Photo Credit: USA Today

One type of debt that is certainly on the rise is consumer debt. Under this category includes items like auto loans, mortgages, credit cards and more. None of these items are considered to be as much of a threat to the debt crisis as personal loans. 

Personal loans can be taken out for a wide range of reasons. They can also have varying interest rates depending on the nature of the loan. One of the main reasons that many people take out personal loans is for consolidating debt. Personal loans can also be taken out for a variety of positive reasons including student loans and auto loans. As most consumers are willing to take on debt in order to access a better interest rate, it’s important to know which type of debt can be positive to take on. 

For consumers that have a significant amount of credit card debt or pay day loan debt, it may be wise to consider taking out a loan at an interest rate that is significantly lower. Using a personal loan can be an apt way that a consumer can pay off balances and then get their monthly payments down without having to incur ongoing interest. 

The funds for personal loan debt have reached well over $273 million in the year 2018. This is considerably higher than the same rates that have been reported from the previous year. It is estimated that consumer debt is now 11% higher than it was in the same period just 365 days before. Consumers are in need of large sums of money and it seems as though they are more than willing to turn to personal loans to access the money that they need. 

A personal loan can be helpful in debt consolidation, and it also works particularly well for lowering interest rates and for keeping any type of payment much lower. It is important to remember that a personal loan is considered to be a debt and it may not be the perfect option for everyone that’s experiencing a problem with ongoing consumer debt.

If you are facing problems in the process of making ends meet and you need to strategize a new form of debt relief, you may want to consider the option to file for bankruptcy instead. Consumer debt and taking on personal loans may only contribute to the debt cycle. Speaking to a financial advisor or bankruptcy attorney could be an excellent way to determine if you would be a good candidate for bankruptcy or a personal loan. 

Both Chapter 7 and Chapter 13 bankruptcy can provide an effective and proven path towards your financial security. If you would like to speak to a debt relief professional you should consider first speaking to a bankruptcy attorney. Speaking to a bankruptcy attorney can give you access to the information that you need to make an informed decision on debt relief. A bankruptcy attorney could also let you know the type of bankruptcy that you may qualify for and the ideal path that you can take to recover your financial situation moving forward. When receiving financial advice from an attorney, it can help to understand the types of debt that you may be able to discharge as well as if a payment plan via a personal loan that could be the right option for improving your financial situation. 

Chapter 7 and Chapter 13 bankruptcy should be seen as a last resort but if you have already used a personal loan in an effort to lower your interest rates and payments, it could be one of the best ways that you can enjoy debt relief moving forward. 

Personal loans may not stand as an excellent relief from debt but they can be an option for many consumers that are facing an ongoing debt cycle. If you are facing a difficult situation, work to find the path that will improve your own debt cycle and find yourself a solution that will enhance your financial security for the future. 

Contact us to get started if you need financial advice in removing yourself from a debt cycle. We can advise if bankruptcy is a wise choice in your case or if financial assistance from a personal loan may be the best option moving forward.