Is Debt Consolidation So Bad

[lor_25]

Hi all

Why most of experts in this debt industry say "Consolidation is a bad idea". Is it really ?

But when you are in deep debt crisis, how can you get off that. No way. Many of them say if you have control on your expenses you never get into debt, but most of people spend just to show off to others. So most of them get into debts very quickly.

Can anyone explain out that Is really consolidation a bad idea.

[Admin]

There are two possible pitfalls to debt consolidation:

1. It could worsen your credit.

2. In some cases, your repayment terms may cause you to actually pay back more than what you really owe. For this reason, you should always make sure you find a trustworthy debt consolidation company who will work for your best interest.

[kmoore]

Though debt consolidation is a bad idea. At times when we are in urgent need of money, most of them fall into debt.

Before finalizing the debt, one has to clarify the following information.
1) Interest rates with others as well as the current market rate.
2) Repayment of loan (period)
3) Repayment amount (one should see whether he is able to pay the sum to avoid higher payments beyond his limits.)
4) Some reviews from other customers about that debt consolidation company.

[Jenita]

Advantages:

• You only make one payment a month which makes it a lot easier to manage your finances and you know exactly how much and to whom you should pay every month.

• The common problem with people who have multiple loans is not being able to manage your monthly budget.

• As most debt consolidation loans are secured against collateral, usually your home and over a long term, the monthly payment will be less than the combined payments for all your other outstanding loans. Also, as these are secured loans, the interest rates will be lower. As you only have one lender to repay, it is easier to deal with if any problems arise. This makes managing your finances a lot easier.

• Any interest paid to a mortgage loan can be written off against tax used as a tax write off.

Disadvantages:

• Most people who are considering debt consolidation already have trouble managing their finances. If you end up with one payment a month and all your outstanding credit card balances paid off, it may be tempting to start using these cards again and then get further into debt.

• As these loans are essentially second mortgages over a long term, it will take you longer to be debt free.

• Even as the interest rate is less, because the term of the loan is over such a long period, you may end up spending more in repayments.

• Perhaps the most important point you must consider before taking out a debt consolidation loan, remember that the loan is secured on your home and if you do not keep up with repayments, you could lose your home.

So although debt consolidation may sound like a great idea, it may not be for everyone. So the advice is to carry out thorough research before making a decision and ensure the interest rate you get for your debt consolidation is the best for you.

[now-or-never]

Hi,

I was in a very debt position but i came out of it only because of debt consolidation.....
Yes i do agree that debt consolidation may not be a good idea but if you opt it with a good organization and having a understanding on both sides you could be on a beneficial side.... You got a lot of websites where you can avail debt consolidation.

Apply for all and opt for the best offer given to you..Infact some offer you a 90-120 days of no interest initially...Finally its your decision that matters so opt for a better deal and ALL THE BEST