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Debt consolidation in Tennessee - Should you go for it and how?

Are you a Tennessee resident, with too many debts? Is the monthly interest on your debts reducing all your chances of saving for the future? If you are looking for an effective way out of your unmanageable debts, then debt consolidation is just what you are looking for!

Debt consolidation is a great way to simplify your finances. It restructures your debts and provides a payment plan that can save you quite a bit on your long-term debts like credit cards, mortgages, and other loans.

How much can you save?
Monthly payment you can afford
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How does debt consolidation work in Tennessee?

Debt consolidation in Tennessee works the same way as in any other state. It is a debt management option that helps you combine all your debts into a single payment that you pay off at a lower interest rate over a longer period of time.

You can consolidate your debts either with a consolidation loan, or you can enroll with a BBB accredited debt consolidation company in Tennessee to get your consolidation done.

If you choose to use a consolidation loan, then you should take out a low or zero interest loan and use it to pay off your existing liabilities. Once you pay these off, you will be left with a single debt towards the consolidation loan. And since your consolidation loan carries a low interest rate, it reduces the amount you pay each month, and saves you money every month.

If you have assets like a house or car, then a secured loan is preferable as a consolidation loan. Secured loans are loans that you take out against some asset (like a house, a car, jewelry, etc) that is used collateral for the loan. Collateral reduces the interest on your loan and increases the amount you can borrow.

If you have substantial equity on your house, then you can use a Home Equity Line of Credit (HELOC) as a consolidation loan. The more equity you have in your house, the lower the interest rate on your loan.

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Pros and cons of debt consolidation in Tennessee

Like 2 sides of a coin, Tennessee debt consolidation has both benefits and drawbacks. Before you decide to consolidate your bills, it’s important to check out the pros and cons and understand what you’re getting into. A practical analysis is important, and that is possible only when you know what are the risks and rewards involved in it. So here you go.

Pros

  1. Gives a predictable payment plan
  2. Eliminates penalties and additional charges
  3. Helps you to pay back creditors at your comfort
  4. Cuts down interests and saves your money
  5. Clubs multiple bills into an affordable payment plan
  6. Gives an easy solution to complex financial matters
  7. Makes your credit report look good

You’ll get an added advantage when you opt for debt consolidation loans in Tennessee. The interests you pay on these loans are tax-deductible. So, you can save money on your tax.

Cons

  1. Requires patience as it takes some time to pay back creditors
  2. Needs the self-discipline to make monthly installments
  3. Its success depends on creditors approval
  4. Backfires when you miss payments

To be specific, it takes between 3 years and 5 years to complete a consolidation program. And, if you miss payments during this period, then the entire program can get canceled. The original agreement made with your creditors gets active once again. So, you can’t afford to miss payments.

If you opt for debt consolidation loans tn, then there is yet another drawback you may have to face. You may lose the collateral pledged against the loan in the event of default. Moreover, some loans in Tennessee have long repayment terms, which can cost you more than your existing debts.

Debts eligible for Consolidation

If you are struggling with the following debts, then debt consolidation is the right option for you:
  • Credit Cards Debts
  • Student Loans
  • Personal Loans
  • Medical bills
  • Payday Loans
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It is important to check out the credit card debt laws in Tennessee, whenever you decide to consolidate your credit card debts. Knowledge of these laws will not only prevent from you falling prey to credit card debt consolidation scams, but will also enable you to enjoy the advantages of credit card debt consolidation.

How to qualify for debt consolidation in Tennessee

To qualify for debt consolidation loans, you need:

  1. A stable income to make monthly payments
  2. A high credit score with a clean credit report
  3. An ideal debt-to-income ratio

To qualify for debt consolidation programs in Tennessee, you need:

  1. A regular source of income
  2. Details of your debts

Debt counselors primarily need 2 pieces of information. First, how much you earn every month, and the second is your debt details. Based on your income, debt counselors can get an idea of your affordability. The debt details are required for doing the homework before they start the negotiation process.

Undoubtedly, it’s easier to qualify for a consolidation program in Tennessee as debt counselors are in a safe zone. They don’t have to worry about monthly payments. If you miss payments, then creditors will suspend your repayment plan, and you’ll be back to square one. Debt consolidation companies in TN won’t suffer any loss. Their profit is only the fees that you pay them for their services. This is why the eligibility criteria of consolidation programs in TN are not stringent.

Should you consolidate debts in Tennessee and how much can you save?

It depends on your financial situation, your attitude towards money and the type of debt consolidation you opt for.

1. Financial situation: Consolidate your bills in TN when you don’t have money to manage them simultaneously. When high-interests of your bills are draining your savings, you can consider debt consolidation.

2. Attitude towards money: If you have learned from your past financial mistakes and changed your attitude toward money, then consolidating your bills is a good idea. You should consolidate debts only when you have adopted a frugal approach toward life.

3. Type of debt consolidation: A consolidation loan will lower your payments and give temporary relief. However, if the length of the repayment period is long, then you would pay a huge amount in total interest. A debt consolidation program in Tennessee is a better option than loan if the fees are reasonable.

How much you can save

It depends on how well debt counselors/attorneys negotiate with your creditors. If they can convince creditors to lower your interests by a big percentage, then you can save a lot of money. Use a debt consolidation calculator to figure out how much you can save in total.

How does a Tennessee debt consolidation company help?

When you sign up with a debt consolidation company, the company takes up your debt issues and works on them by:

  • Assessing your debt issues and financial position.
  • The company's debt consolidation attorney will then notify your creditors to stop all communication with you and that your debt issues are being handled by the company.
  • Then the lawyer will start negotiating with your creditors to eliminate your late fees and reduce the interest rates on your accounts. The negotiation will determine new interest rates for each and every creditor.
  • Then the company will apply these new interest rates to devise a consolidated payment program to suit your monthly budget. The program will require you to pay a single monthly amount fixed by the company. It will be determined so that most of the money you pay is used to repay the principal and not the interest. From your monthly payments, the company will distribute the monthly installments of your individual creditors. The payment process will continue till you have paid off all your creditors.

How to find good debt consolidation companies in TN

There are a few ways to find good debt consolidation companies in TN. Some of them are listed below:

  1. Call your friends and ask them to suggest good companies in your city. Ask about their experience of working with those companies. How many points will they give to those companies out of 5? What did they like and dislike?
  2. Search online with key phrases like debt consolidation companies in Chattanooga TN, debt consolidation companies in Memphis TN. Replace Chattanooga and Memphis with your city name.
  3. Read online reviews to know about the actual feedback of the clients. There will be both negative and positive comments. You have to analyze both of them before you make a judicious choice.
  4. Inspect the website of the debt consolidation companies in TN. A website can tell you a lot of things about the company. For instance, it’s location, fee structure, success rate, privacy policy, and so on. You can get detailed information about the company.
  5. You can just call 800-530-OVLG and get a free consultation on the various ways to get affordable debt relief in Tennessee. OVLG offers debt consolidation services in all the cities of Tennessee for credit card bills, medical bills, payday loans, utility bills, storefront credit cards, personal loans, and so on. So, all you have to do is call the toll free number and get debt assistance within a few minutes from any corner of Tennessee.

Where can you get debt consolidation programs in Tennessee?

Debt consolidation programs are available in various cities of Tennessee in different names. Usually, these programs are named after the cities where they are offered. A consolidation program offered in Chattanooga, TN is called debt consolidation Chattanooga TN. Likewise, a consolidation program in Cleveland is called debt consolidation Cleveland TN. The other cities where debt consolidation is offered are Clarksville, Nashville, Franklin, Jackson, Knoxville, Memphis, Murfreesboro, Morristown, and Maryville.

Apart from programs, debt consolidation loans are also offered in most of these cities like Chattanooga, Cleveland, Clarksville, Jackson, and Knoxville. Like programs, these loans are also named after the cities.

How debt consolidation affects your credit score?

Debt consolidation is possibly the best debt relief option, as far as the credit score improvement is concerned. Since with consolidation you pay off the total amount, it causes minimal injury to your credit score.

A consolidation loan lowers your already low your credit score. But that is temporary. As your several defaulted accounts get paid off, your credit score shoots up. Gradually your score regains a good shape , as you pay off your consolidation loan over time.

The case is almost the same when you get your loans consolidated through a debt consolidation company. As your debts get paid off, your credit score bounces back.

However, you should to stick to the following, while you are in a debt consolidation program:

  • Do not close your credit card accounts soon after you have paid them off, as it impacts your credit score negatively.
  • Avoid taking out any new loans, while on a consolidation program, as it can lower your score.
  • Make timely payments. Timely payments improve your credit score fast.
  • Avoid balance-transfer, especially if you apply for a new credit card in order to use its low teaser rate. If you fail to pay off within the trial period, your interest rates will return to normal, and that can hurt your credit score.
  • Avoid frequent application for credit, while on a consolidation plan. Applying for new credit every six months could open up possibilities for new defaults.

Handled carefully, debt consolidation can be an excellent means to fix your bad credit score. But a little carelessness and you might end up ruining your credit score!

Related information


State Attorney General Phone Number: 615-741-4737, 615-741-1671; Toll Free: 1-800-342-8385
Public Service Commission Phone Number: (615) 741-2904

FTC Address:
Southeast Region Federal Trade Commission Suite 1500 225 Peachtree Street., NE Atlanta, GA 30303.
FTC Toll Free:
877-FTC-HELP (382-4357)
FTC Website Url:
CFPB Toll Free:
1-855-411-2372
CFPB E-mail:
info@consumerfinance.gov
whistleblower@consumerfinance.gov
CFPB Website Url:


Last Updated on: Tue, 26 May 2020