Debt Consolidation - Full Facts

In simple words Debt Consolidation means consolidating all your debt into a single debt with lower interest rate and lower monthly payment.

1. For example if you have three credit cards with interest rates of 25%, 22% and 21%, get a bank loan for 10% and pay off all the credit cards will improve your financial situation.
2. You can also transfer the high interest credit card debt to a lower interest credit card.
3. Debt Consolidation will help you a lot with the payment date. Since you have a single payment you can avoid late fees penalties. It will help you financially plan better.
4. You need to make a promise not to get additional debt until you pay off the consolidated debt completely. Otherwise debt consolidation will not help you and it will just worsen the whole financial situation.
5. Remember that debt consolidation does not reduce your total debt.
6. If you are borrowing against your home equity, advantage is your interest rate will be less & if the borrowing amount is less than $100,000 interest payment is tax deductible. Disadvantage is remember your home secures the loan and you could lose your home if you could not make the loan payment.
7. Another great way to debt consolidation is to borrow against your life insurance. Please check your policy to see the terms. It may be the easy to borrow for your financial situation.
8. You can also borrow against your 401K retirement plan. Note: You can be charged 10% penalty if you don't pay all the money back with in 5 years and assuming you are younger than 60.
9. Do not trust the debt consolidation companies who say they will lend you money to consolidate your debt.
10. Do not trust companies who promise to negotiate debt consolidation for an upfront fees without completely details.
11. Call 877-256-1471 for help.
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