Advantages and Disadvantages of Debt Consolidation Services

Getting over debts can be a tough challenge. Some people try to resolve bad credit on their own while others seek professional help. For instance, if you try to avail credit and debt counseling services, consolidation may be one of the solutions that your counseling agency would recommend. What are the advantages and disadvantages of debt consolidation?


Advantages of Debt Consolidation Services



Are You In Debt?
The primary advantage of debt consolidation is that by combining all your debts into a single account, it becomes easier for you to remember your due dates and track your payments. There is no need to juggle your payments between different creditors. Debt consolidation also means paying only a single interest at a much lower cost.

Through debt consolidation, it is possible to slash off a significant amount of fees from your total debts. Instead of continuously incurring the additional interest each month, you can pay off all your creditors at once and stop your debts from accumulating. Most creditors are even willing to make adjustments to make repayment easier for their clients, especially if there is a possibility that the client may file for bankruptcy.


Disadvantages of Debt Consolidation Services

Nevertheless, signing up with the wrong debt consolidation company can only make matters worse for someone in debt. Take note that not all credit counseling agencies or debt consolidation companies have your best interests at heart. There are agencies offering counseling services that are actually designed to take advantage of your financial situation. Therefore, if you do decide to sign up for counseling or a debt consolidation program, it is crucial to do extensive research first before making a choice.

Another risk about consolidation is the tendency to incur new debts right in the middle of repayment. Remember that consolidating your debts does not exempt you from your obligation to pay. You still need to keep up with your monthly consolidation payment to your lender. Unfortunately, some people found themselves stuck in new debts while still in the middle of their consolidation loan repayments. Instead of being free, these people have only added a heavier burden on their shoulders.


How to Make Debt Consolidation Work

Debt consolidation can help you get out of debt more easily but only if you know how to make it. After consolidating your debts, you should avoid incurring new debts from your creditors so that you can focus on paying off your loan.

Pay attention to your spending and lifestyle. What circumstances led you to bad credit? Are you in the habit of spending more than what you can afford? Do you tend to neglect or forget your payment schedules? The need to take out a consolidation loan should be a wake-up call to remind you about your responsibilities.

Even before you sign up for debt consolidation, create a monthly budget plan to make sure that your income would be properly allocated. Bear in mind that your number one priority should be completing your consolidation loan payments at the soonest possible time.


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Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

7 Comments
  1. Without question, debt consolidation is an ideal first step for people in over their heads in debt. But it’s not an end all be all solution. As people attempt to repair their credit image, it’s important for them to change the habits that got them into so much debt in the first place. They have to hit those hopefully manageable targets so that the debt does indeed eventually get paid off. Debt consolidation is an important and necessary step, but learning how to stay out of future debt is just as important.

  2. Wishing you all a Merry Christmas and all the best for 2010!
    Christmas is a time when everyone wants his past forgotten and his present remembered.
    There are many payday loan companies in Canada. How do you know which one to choose? Research is very important. Depending on your needs, you can look up payday loan rates, policies, company credibility, etc. You can do this by taking a look at the payday loan websites and going through their pages to find pertinent information.

  3. People know that there is nothing wrong in having a debt. Nut maybe some people would think that it is hard to pay and there is some people who are only very eager if they will get the debt but if payment comes oh my!!! it is very difficult, and even the debtor has the difficulty. Anyone that is having debt troubles might do well to find some debt management plans that could work for them. Often, this involves finding a debt counselor who will come up with the plan with you, and your creditors will also appreciate your efforts to get debt relief and repair credit for yourself. And just be responsible enough.

  4. I think you made an interesting post! I hope you will update your blog!!! <3 I will visit again later. =)

  5. That was a very interesting read I learned quite a bit from that. I will be constantly visiting this page!! ^^

  6. Thanks for sharing your thoughts. I really appreciate your efforts and I am waiting for your next write ups thank you
    once again.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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