Debts can really wear you down, both financially and emotionally. Whether you are struggling with mortgages, a huge medical debt or other types of financial obligations, your debt will feel like a heavy, exhausting weight on your shoulders and your wallet. And when you are dealing with several debts at the same time, sometimes the best thing to do is to merge them into a single, bigger one.
How do debt consolidation loans work?
A debt consolidation does exactly what we just mentioned above: it combines all your debts into just one bill. That bill has to be paid on a monthly basis and it comes with an interest rate. This way, you will manage your debts easier, because you’ll only have a single one to pay, instead of several of them. When getting a debt consolidation loan, you strive towards lowering your interest rate and to pay your debt faster. A debt consolidation typically lasts from 24 to 48 months, give or take, depending on your financial situation.
Debt consolidation loans can be secured or unsecured. Unsecured loans usually come with a higher interest rate, as they are riskier for the lender. Examples of unsecured debts are medical bills, credit cards, etc. They are called ‘unsecured’ because they are not backed (secured) by any type of asset or property that can be used to pay the loan in case you can’t pay them anymore.
Secure loans are those that are secured, such as a car loan, a mortgage and they are usually secured by the asset/property you are taking the loan for. The interest on them is not as high as that applied for unsecured loans.
Pros of debt consolidation loans
One of the most common reasons why people make debt consolidation loans is to merge all their debts into a single loan, so they can manage their finances easier.
Debt consolidation also helps you get a lower interest rate and improve your credit score. When used correctly, debt consolidation helps you pay your debts faster and within the agreed period, thus improving your credit score.
Pacific Debt Inc. is a reputable name when it comes to debt consolidation and debt relief services. The company has more than 17 years of experience and is based in San Diego. It has an A+ rating with the Better Business Bureau and has several accreditations (American Fair Credit Council, Consumer Affairs, International Association of Professional Debt Arbitrators).
Pacific Debt boasts on settling more than $200 million in debt so far.
One of the best things about Pacific Debt is the fact that it has some of the lowest fees on the market. They charge you from 15 to 22% of your total enrolled debt. And just for your peace of mind, Pacific Debt doesn’t charge any upfront fees, as industry regulations don’t allow that.
On the other hand, the average reductions after fees are also among the lowest on the market, which is not a good quality in a debt consolidation service.
Pacific Debt requires a minimum of $10,000 in unsecured debts in order to qualify for their debt consolidation services. This is pretty much the average amount in this industry. While loans such as credit cards, medical bills and others are accepted, there are some which aren’t, such as student loans and payday loans.
Pacific Debt’s program lasts between 2 and 4 years, from case to case.
While Pacific Debt is legit and trustworthy, it doesn’t really cover too much of the US. The company only works with 28 states (Alaska, Alabama, Arkansas, Arizona, California, DC – District of Columbia, Florida, Hawaii, Iowa, Idaho, Indiana, Kentucky, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah and Virginia). So, unfortunately, if you don’t live in one of these, you have to look for another company.
How does Pacific Debt work?
In order to apply for their debt consolidation program, you have to call them or fill the form on their website. The phone consultation is free. Even if you go with the online form, you will also be contacted by their specialists on your phone. On the form, you have to fill in your contact details, state and the type of debt you want help with.
You will be contacted by one of Pacific Debt’s specialists, who will analyze your case, including your income, monthly expenses and your debts. Based on your particular situation, you will be informed whether you qualify for their program or not. If everything looks good, you’ll enroll and you’ll have to start depositing money into a FDIC-insured account. The money you deposit will be used to pay your debts. The fee charged by Pacific Debt will also be drawn from that account, but only after your debt has been consolidated and you complete the program successfully. Once you are enrolled into their program, Pacific Debt will also start to negotiate with your creditors.
Paying your debts is only the first step to rebalancing and improving your financial situation. The next step is to also educate yourself so that you won’t make the same financial mistakes in the future. Pacific Debt is also useful for its comprehensive resources you can find on their website. They have a blog and articles that offer a lot of financial tips and info on various topics, including debt settlement, credit counseling, bankruptcy and others.
Overall, Pacific Debt Inc. is a legit and reputable company. It is experienced, has a lot of accreditations and it also has average minimum debt requirements for enrolling in their program. It doesn’t have hidden fees, upfront fees and it has low interest rates. However, average reductions are not great either, which kind of cancels the other benefit.