There are consumers who are exploring different options that will offer them debt relief through either forbearance or debt consolidation, as events that are currently in place in the economy, job market, and even the housing market are still weighing heavily on consumers and their ability to handle their finances at the present time. As an example, there are consumers who are facing an inability to meet payments on debts that were previously easily made due to reductions in their wages or being underemployed, but there are also areas of debt like student loans that may be an issue for some as this particular type of debt is reportedly competing with credit cards in terms of the number one debt obligation that Americans face.
Understandably, when it comes to these issues, many consumers feel that if they cannot keep their financial life on track then they may begin to miss payments, default, and if the situation gets to a point where these problems have become so dire that consumers are in these difficult positions, many worry that missed payments on a mortgage, car loan, or federal loans may follow and this could have very negative repercussions in their life. However, some of these men and women who are facing repayment problems are looking for debt forbearance opportunities or debt consolidation loans as a way to either forego making payments on these debts or at least find a more affordable payment on a monthly basis.
Essentially, these plans do offer both positive benefits for a consumer but there are drawbacks that need to be understood and applied to a particular consumer’s financial position. Yet, what many consumers fail to overlook is indeed these negative aspects to either forbearance plans and consolidation loans, so for those who are struggling at the present time, it may be the case that one of these plans or the other may not be best for a consumer’s particular situation.
Obviously, many consumers are aware of how debt consolidation can be helpful, in that it will group multiple debts into one payment obligation, like a consolidation loan, and this will usually offer a more affordable monthly payment versus the total monthly payment on multiple debts that may have previously been in place. Also, like with student loans, there are some options for other personal debts to receive forbearance through certain debt assistance programs that may be offered from creditors, and for men and women who may get to forego making payments for a few months or much longer, and this can be incredibly helpful while they try to get back on their feet.
What consumers must remember is that when it comes to debt consolidation, the overall costs will likely be much higher as paying off a consolidated principle, even when an affordable interest rate is offered, will take much longer and as a result these interest payments will cause the total amount that a consumer pays to be much higher in most cases. Also, forbearance opportunities that may be offered from a credit card lender, a bank, or on certain types of student loans can seemingly be a phenomenal opportunity for a consumer to avoid missed payments by having these payments suspended altogether, but it needs to be understood that many of these forbearance opportunities will bring continued interest costs as certain types of forbearance plans still allow interest to accrue despite a consumer not paying down what they owe.
Recent talks about our national debt and the debt ceiling have led many consumers to review their financial situation and address their debt issues as well, which can be positive especially if a consumer has bad habits in their life or potential problems that may be on the horizon, but when it comes to using a consolidation loan or even a debt forbearance plan to find debt relief, this will not be the best route for every consumer and therefore is a personal decision that must be made by a consumer, even if it is with the help of a financial official. No consumer’s financial situation will be exactly like someone else’s, so when it comes to these repayment plans, general information or even general advice from a financial official like a credit counselor can be helpful but it comes down to the consumer having to look at their financial position, the debts they owe, and how various debt repayment plans will affect their financial life before the best decision can be made.