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My wife and I are working really hard to get out of debt. We are overwhelmed with 5 credit cards, 2 car loans, student loans for both of us, a mortgage, and furniture that we financed. We now clearly see the mistakes we made and the dangers debt can present. I've been doing some research to figure out the best way for us to pay off the debt without going bankrupt and am confused between debt consolidation vs debt settlement. Can you explain and recommend which is best?
Pain - Stress - Kind - Burden - Effects
I am so sorry for the pain and stress you are experiencing. That kind of financial burden can be crippling and have devastating effects on your health, relationships, and financial future. My wife and I suffered under crushing debt early in our marriage so we are compassionate toward those who have made similar mistakes.
The good news is that you CAN work your way out of this. Debt consolidation and debt settlement options are tempting because they seem to lance the pressure. But, I do not recommend either one. Here's why.
Process - Debts - Loan - Bill - Drawbacks
This is a process where debts are combined into one loan, making it easier to pay one bill than several. But it has some major drawbacks:
Other Forms of Debt Consolidation:
Balance - Credit - Card - Credit - Card
Transferring your balance on a high-interest credit card to a low-interest credit card can be an option, but only for those with excellent credit scores (above 700). Again, even this option comes with hefty drawbacks: you may be charged a fee of up to 5% of the balance, you cannot miss or fall behind on any payments, and interest kicks in after 12-18 months. You can read more about...
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