Question on Debt Consolidation Loans..?
Question:
We have them in the US BUT why use them when you can pay the debt yourself? Using those companies causes them to appear on your credit report. Showing that you could not handle paying your debt yourself.
Start with the card/debt with the highest interest rate. Try to settle for less and make payments til you knock them down. That is basically the same thing the company will do.
Paying a company a high interest rate just so that they can pay your debt will not put you ahead any faster.
Don't do it.
"Myth: Debt consolidation saves interest, and you have one smaller payment.
Truth: Debt consolidation is dangerous because you treat only the symptom.
Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. True debt help is not quick or easy.
Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work.
Debt Consolidation Statistics
A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt. "
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In my opinion, debt consolidation is the equivalent of Chapter 13 bankruptcy. I agree with the person who said it is a "con". These companies, in my opinion are acting as bankruptcy attorneys without a law license.
Below link will certainly help you.
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