Can I use a personal loan for debt management?

Juggling multiple monthly payments for various debts can be more than just stressful — it can be financially crippling. Personal bankruptcy can be an effective debt management solution for Connecticut consumers who can no longer keep up with their monthly payments, but some people are trying a different route first. Personal loans for debt consolidation are becoming an increasingly popular choice.

In 2018, personal loan debt grew more than debt for credit cards, auto loans and all other types of consumer debts. There are currently more than 36 million outstanding personal loans in the United States, and the average balance sits at $15,143. The average can fluctuate depending on the age group, with baby boomers shouldering the largest balances at about $19,403. Generation Z owes the least in personal loans, and that generation’s average balance comes out to $5,941.

People take out personal loans for many different reasons, but the most common uses are for debt consolidation and for financing significantly larger purchases. While it might not seem like a smart idea for someone who is struggling with debt to take out a loan, it can be helpful when done effectively. The average monthly payment for a personal loan comes out to around $353, so those who use a personal loan to pay off multiple debts at once they can actually lower how much they pay every month toward debt.

Personal loans are effective debt management tools when used correctly. However, this approach is not the best option for everyone. Some Connecticut consumers might be dealing with more debt than a personal loan can address, making something like personal bankruptcy a better option for their situation.