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Is consolidation the right solution for credit card debt?

Many people make rash debt management decisions that can affect their future financial situation in a major way. Debt consolidation under a line of credit is one of the common ways Texas residents manage their high interest credit card debt, but it is a good idea to weigh out the pros and cons of doing so before going ahead. It is important that people fully understand the terms of any line of credit before going ahead with this decision, and consider their own situation carefully before taking this step.

It can be a red flag if a Texas financial institution approves a large line of credit, especially for someone with a great deal of credit card debt. Look carefully at the terms for this loan before moving forward. Does the interest increase after a certain term? What assets are on the line if one is not able to pay as planned? 

People should also consider their own tendencies when looking at this option. If the line of credit provides more access to funds, borrowers should be sure that will not tempt them to increase their debt load. One should always look to the future and understand possible circumstances, such as a job loss, before taking on or even reorganizing debt.

A Texas resident without the reasonable means to repay credit card debt cannot solve this issue by consolidating debt into a line of credit. Debt loads can sometimes require more extreme action, such as filing for bankruptcy. In these cases, working with a lawyer to understand the applicable state and federal laws concerning bankruptcy is a good idea.

Source: theprovince.com, "Hidden Dangers of Using a Line of Credit Not Loan to Consolidate Debt", Scott Hannah, April 16, 2018

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