The Rising Tide of Debt Consolidation in the Southeastern United States

Americans, as a whole, are turning to debt consolidation at an ever increasing rate.  This trend is perhaps most profound and expansive in the South and Southeastern United States, profoundly affecting large, booming cities such as Atlanta and Little Rock.  Though debt consolidation will certainly save a credit card holder a great deal of interest money, this sign of consumer debt (much less, savings) is very worrying to many economic analysts.  

There are many reasons why people choose debt consolidation, though most often credit card debt is the culprit.  Strictly speaking, home refinancing is a type of debt consolidation that sometimes will consolidate the remaining amount of a two small loans (less equity) into a single loan, especially in the case of those who are avoiding the so-called “jumbo loans” of over $400,000.  

During the building boom of the 1990s, upper-middle class homes often reached values approaching half a million dollars, stretching even dual incomes so tight that the market was primed for credit card induced debt consolidation.

Of those using debt consolidation to pay off high-interest creditors, most are carrying more than $70,000 of debt, often at rates over 25% annually.  That's more than 2% per month or $1,400 in interest payments alone each month.  Though most states in the southeast have laws preventing excessive interest, the cap is usually over 100%.

Debt consolidation can take that level down to a much more reasonable level, just a bit over the prime rate.  Unfortunately, many who've gotten into credit card trouble wait to seek debt consolidation relief until they've already done damage to their credit score.  Sometimes balances can be transferred from one credit card to another with a lower rate, though such transfers usually come with a high fee.  Also, lower introductory interest rates on these transfers are often rescinded with the first late payment or after the first year.

Additionally, paying off a large credit card loan all at once very often leads to a non-renewal of that credit card, though many view this as a blessing rather than a curse.  Before signing on for debt consolidation, it is wise (and sometimes required in the case of subsidized or guaranteed debt consolidation loans) to have a budget that you can adhere to – one that includes savings to avoid having to go to the credit card well again.  

In the Southeast, debt consolidation is increasingly viewed with less scorn or skepticism given just how many people are choosing this option.  As of 2006, over 20% of Americans in the Southeast had turned to debt consolidation in the last decade.  With the realization that they had a problem with debt and programs designed to address credit spending, many people have successfully used debt consolidation loans to  get out from under that financial rock for good.

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