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Debt Consolidation in Phoenix, Arizona: A Helpful Guide
Living in Phoenix? Finding yourself drowning in debt? You’re not alone. Debt is on the rise here in the Phoenix metro area. The average credit card debt an Arizonan carries is around $7,100 – which is higher than the national average of $5,700
.With all this debt weighing us down, it’s no wonder many Phoenix residents are turning to debt consolidation as a potential solution. But what exactly is debt consolidation, and could it help you? Let’s break it down.
What is Debt Consolidation?
Debt consolidation simply means taking all your debts and combining them into one single payment
. The goal is to simplify what you owe and ideally lower your interest rates.Most debt consolidation plans focus on high interest debts like credit cards. By rolling multiple credit card balances into a debt consolidation loan with a lower interest rate, you can potentially save money each month.Consolidating can also help you:
- Avoid bankruptcy (if you owe less than 50% of your income)
- Repair damaged credit from late payments
- Force yourself to make progress and get out of debt faster
Debt consolidation companies create customized plans to fit your financial situation. The plan consolidates what you owe into one lower monthly payment sent directly to your creditors.Once an account is paid off, the extra money goes towards paying down your next highest debt. This “debt snowball” method helps you pay off debts faster.
Top Debt Consolidation Companies in Phoenix
There are many debt consolidation companies to choose from in the Phoenix area. I recommend checking out these top-rated options:
- Accredited Debt Relief – 5 star rated debt settlement service. Lower your debt by up to 50% with no loans.
- Freedom Debt Relief – One of the largest debt settlement companies in the U.S.
- National Debt Relief – Over 98% customer satisfaction and accredited by the BBB.
- DebtRx – Local Arizona company with debt settlement and credit counseling services.
- Phoenix Debt Relief Help Center – Non-profit debt consolidation program and credit counseling.
I recommend researching reviews and comparing services to find the best fit for your unique situation. Look for companies with a solid reputation that make you feel comfortable.
Debt Consolidation vs. Debt Settlement
Debt consolidation and debt settlement sound similar but work differently:Debt Consolidation
- Combines debts into one payment
- Typically lowers interest rates
- Pays back debt in full over time
- Negotiates with creditors to settle for less than you owe
- Typically saves 40-60% of what you owe
- Can impact credit score
Debt consolidation is better if you can still afford monthly payments but want to simplify and lower rates. Debt settlement gets creditors to agree to take a discounted lump sum payment, but may hurt your credit.
Pros of Debt Consolidation
The potential benefits of debt consolidation include:
- Lower interest rates save money each month
- Simplify multiple payments into one
- Pay off debt faster with “debt snowball”
- Improve credit by avoiding late payments
- Receive customized plans for your situation
- Consolidation loans can provide needed funds
- Non-profit credit counseling provides guidance
Consolidating high interest debts like credit cards can provide real savings in interest fees. And simplifying what you owe into one payment can relieve stress and make managing debt easier.
Cons of Debt Consolidation
There are also some potential downsides to weigh:
- Upfront fees with debt settlement companies
- Loan terms may extend payoff time
- Missed payments damage credit further
- Non-legitimate companies take money without paying debts
- Qualifying for a consolidation loan with bad credit can be difficult
Be sure to vet any debt consolidation company thoroughly. And make sure you can afford the monthly payments – otherwise consolidation may do more harm than good.
Is Debt Consolidation Right for You?
So how do you know if debt consolidation is the right solution? Here are some signs it could help:
- You owe money on multiple high interest debts like credit cards
- Your monthly debt payments total 20% or more of your income
- You struggle to pay more than the minimum payment each month
- Your credit cards are maxed out or close to the limit
- You’ve used savings to pay bills
Answering “yes” to any of these indicates debt consolidation could provide some much needed relief.
How to Get Started with Debt Consolidation
If you want help with debt consolidation in Phoenix, I recommend connecting with a nonprofit credit counseling agency like Money Management International.You can also contact one of the debt consolidation companies above to receive a free consultation and discuss your options. Be sure to ask questions and understand all terms before signing anything.To get started, have these items ready:
- A list of all your debts and amounts owed
- Your credit report to review all debts
- Pay stubs to verify income
- Monthly expense information
With this info, debt consolidation companies can assess your situation and create a customized debt relief plan.
Alternative Debt Solutions
If debt consolidation doesn’t seem right, here are a few other debt relief options to consider:
- Credit counseling – Nonprofit agencies provide guidance on budgeting and managing debt.
- Debt management – Makes one monthly payment but doesn’t reduce amount owed.
- Bankruptcy – Legal process eliminates many debts entirely. Big credit hit.
- Debt snowball – Focus on paying smallest debts first before larger ones.
- Balance transfer card – Transfer high interest balances to a 0% intro APR card.
I encourage you to explore all options to find the best debt solution for your personal financial situation. Relief is possible!
The bottom line? If debt is bringing you down, take control of your finances with debt consolidation. Simplifying multiple payments into one and lowering interest rates can provide real savings each month.Just be sure to find a reputable debt consolidation company that makes you feel comfortable. And don’t take on any additional debts during the program.With focus and commitment, you can get out of debt and back on solid financial ground. Don’t wait – seek help today and enjoy debt freedom tomorrow!