Texas residents who have a lot of consumer debt may be able to find relief through debt consolidation if they are serious about and dedicated to improving their financial situations. In a debt consolidation, a person's high-interest debts are consolidated into one payment at a lower interest rate.
Debt consolidation works best if the debts are not insurmountable, meaning that they can be paid off within five years. The individual's debt load should not exceed 50 percent of their income. The debtor also needs to have a good enough credit score that they can qualify for a 0 percent credit card or fixed-rate personal loan. Home, car and student loans do not count towards an individual's debt load.
If someone qualifies for a 0 percent credit card, he or she can transfer his or her debts to the credit card and pay it off during the interest-free promotional period. A person may also qualify for a 7-percent personal loan, which is substantially lower than the nearly 25-percent rate that some credit cards charge. In order for the debt consolidation process to be successful, a debtor needs to create a plan for curbing excessive spending in the future.
Filing for bankruptcy may be a viable option if someone's debt, including medical bills, exceeds 50 percent of his or her income, or he or she won't be able to pay off his or her debts in five years. An attorney may be able to explain how the process works and which type bankruptcy would be best for his or her client. A lawyer also may be able to explain other options, such as credit counseling services or working with a debt management company.