Debt Consolidation: The Good, The Bad, and the Ugly

When you meet with a credit counselor they will start the consumer credit counseling process by explaining your options for dealing with your debt.  One of the options to consider is debt consolidation.  Here’s what you need to know.

First, the good: a debt consolidation loan is used to combine the payments for many debts into one payment, so you only have one payment to remember each month.  As an added benefit, the interest rate on a debt consolidation loan should be lower than the interest rate you are paying on your credit card debt and other high interest debt you are consolidating.

The bad: you may not be able to afford even the new, lower payments on your debt consolidation loan.  Do a budget first, and don’t agree to anything you can’t afford.

The ugly: there are many debt consolidators that will charge you a fee for doing what you could do yourself, so don’t sign anything until you read it.

Debt consolidation is a great option for many people, but only if you consider your options carefully, and think before you sign anything.

1 Comment »

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