Debt consolidation in New York is a process whereby an individual attains a loan to pay off creditors. Subsequently, instead of making multiple payments to various creditors each month, you make one monthly payment towards the loan. There two types of debt consolidation loans available. The differentiating characteristic between these two types of loan is that one is secured by your home, while the other is simply obtaining a loan from a company.
If you opt to take a loan from a debt consolidation company, you agree to make one monthly payments to them. In turn, they will work with your creditors to settle your debts.
Alternatively, you have to the option to regain control of your financial circumstances via a home equity line of credit or a second mortgage. It is essential that you think very carefully before pursuing this option because you will be using your home as collateral. Failure to repay the loan could result in losing your home.
This option requires considerable thought, particularly if the equity in your home is more than what you are allowed to protect under the New York Home Exemptions. If this is the case, a Chapter 7 bankruptcy will require you to surrender your home. Filing a Chapter 13 bankruptcy will enable you to keep your home, however you may prefer debt consolidation in New York.
Debt consolidation still requires you to pay back outstanding debt, whereas bankruptcy may eliminate most unsecured debt when you file for a Chapter 7 bankruptcy. It is important to weigh your options carefully before entering into an debt management strategy. Failure to do so may result in you losing valuable property.