Whether you want to pursue debt consolidation in order to make a good financial situation better or to pull yourself back from brink of bankruptcy you will want to consider good and bad things that may result from choices you make.
Perks and Potential Benefits of Debt Consolidation
1. Debt consolidation should lower your monthly payments, and preferably your interest rates as well. This will lower long term cost of your debt.
2. Debt consolidation may improve your credit rating and make it easier for you to purchase a home or automobile.
3. When done properly debt consolidation can remove a great deal of emotional and financial pressure from your life.
4. Debt consolidation may help many people avoid having to file for bankruptcy.
5. A significant benefit of debt consolidation is elimination of harassing phone calls from creditors and collection agencies. This will happen more quickly when debts are paid off through home equity or personal loans. It should still happen over time through debt management plans when creditors realize you are working in good faith to pay off your debt.
Pitfalls or Things to Avoid in Debt Consolidation
1. Avoid debt consolidation loans or plans that require high up front fees. Reputable lenders and credit counseling agencies generally charge low fees, or no fees.