Boca Raton Bankruptcy Attorney

What is Debt Consolidation?

While the idea of taking out one large loan to pay off others may seem counterintuitive, it may actually be of great benefit to your financial situation when well-planned and executed.

This action, known as debt consolidation, can help the borrower secure a lower or fixed rate of interest, in addition to making the action of paying off a debt easier to deal with, since he or she is only dealing with a single loan.

Debts consolidated into a single loan often have a lower interest rate because they are secured, versus the multiple unsecured smaller loans. A secured loan is one that is backed by collateral, such as the mortgage on a house. Since the risk to the creditor is smaller because they can recollect on the collateral, they can afford to lend at a diminished interest rate.

One common area in which debts are consolidated deals with credit cards, as the interest rates involved here may be even higher than major, unsecured loans from banks. However, predatory lending is always a concern for those looking to consolidate their debts in a hurry and those who cannot afford to investigate alternatives. Always try to keep your options open when considering debt consolidation, and do thorough research into the advantages and drawbacks of each.

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If you or someone you love has been affected by financial issues and you think bankruptcy might be a viable option, contact an experienced Boca Raton bankruptcy attorney from the office of Eric N. Klein & Associates, P.A., today by calling 561-353-2800.