If you've trapped yourself in a lot of debt and are looking for a solution to get out and save
your credit - many consider getting into "low interest rate debt consolidation." Don't get me wrong,
for most, low interest debt consolidation is a great idea and much needed - can do much to help.
However, that is not the case for everyone. You need to look at your specific situation and think
about what you may be doing.
Here are some of the main benefits for using debt consolidation in the first place:
1. Having to make only 1 main payment
2. Lowered interest rate
3. More flexibility on payments
4. No creditors harassing you
But, there can be some true negatives to debt consolidation as well if you're not careful about what
situation you're in and blindly consolidate your debt.
For example, most people will consolidate their debt into their home or other asset loan. Although
at the surface this may seem like a great idea, you need to consider the amount of loan it is and
what your risks are if you do not pay it.
If you simply do not pay a credit card, you can be forced into bankruptcy, however, at least your
home will not be taken away. There is a specific law that protects you from losing your primary
residence and more. I learned this from an actual mortgage broker who was in debt and refused to put
it in his home.
However, if you transfer your debt onto your home and then default, it is important to know that
your home may be taken away from you at that point.
Every situation needs to be evaluated seperately. Luckily, there are many other options out there as
well for low interest rate debt consolidation - you do not have to always consolidate into your
home. There are literally hundreds of programs that can help.
