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Understanding debt consolidation

Massachusetts consumers who have substantial financial obligations have some options when it comes to resolving their situation. One of them could be debt consolidation. With this method, people can convert their debts with high interest into a single, manageable payment with low interest. It is a personal finance method that allows them to lower and reorganize their debt.

However, while debt consolidation can help people pay off their obligations quicker, it does not tackle the spending behaviors that resulted in the accumulation of the debt. Consolidation should also not be used if people have overwhelming debt that they would be unable to pay off even with small payments.

Debtors can consolidate their obligations in one of two ways. Both methods entail converting their payments into a single bill to be paid monthly. They can obtain a balance-transfer credit card that charges no interest, move the debts onto the card and pay the full balance within the promotional period. They may also obtain a personal loan with a fixed interest rate, allowing them to pay off their debts with the loan and then pay off the loan according to the terms of the agreement. Debt consolidation is an ideal way if the debt is less than half of the consumer's income and the consumer qualifies for a no-interest credit card or low-interest loan. The debtor should also have a cash flow that is able to cover the consolidated payments

. An attorney may advise individuals with substantial debt about their legal options, such as filing for Chapter 13 bankruptcy. The attorney may evaluate a client's financial circumstances and may explain how Chapter 13 can stop creditor harassment, create manageable payments, stop foreclosures and provide an opportunity for a fresh financial start.

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