3. Debt Consolidation Program Advantages and Risks
Using a debt consolidation program may seem like a great way to get yourself out of debt, but before you go ahead with one you should take a look at the advantages and potential risks.
- A debt consolidation program can reduce your monthly payments.
- A debt consolidation program can give you a head start on credit repair.
- A debt consolidation program can prevent you from making payments late.
- With a consolidation program you can get the expert help you need to get your finances back on track.
- A consolidation program will prevent creditors from harassing you or pursuing legal action.
Debt consolidation program risks
However, any consolidation program may carry with it the following risks:
1. The program will not automatically get rid of your debt; it will only transfer your multiple debts into one. You will still need to pay back the same amount of money eventually.
2. A consolidation program could cause you to fall even deeper into debt. For example, with old credit card bills being combined, you may feel that you have more credit on each card, but that is not the case. If you max out those credit cards again you could find yourself in even worse shape.
3. With a consolidation program there is a possibility that you could end up paying more interest. Your debts may be combined, but it could take longer to pay off the complete amount. If you end up taking a long time to complete the payments, it could result in higher interest costs.
4. Some people choose to use a home equity loan or home equity line of credit as collateral. Be aware that if you choose to do this, and do not make payments on time, you could potentially lose your home.
To conclude, a debt consolidation program may help you consolidate your debt, but you should only start a debt consolidation program if you are confident that you can make the payments.
More Information on debt consolidation:
- Debt Consolidation
- Debt Consolidation Loans
- Debt Consolidation Programs
- Student Loan Debt Consolidation
- Debt Consolidation Services – Why Should I Use One?
- Credit Card Debt Consolidation: Should I Consolidate My Credit Card Debt, or Just Go Bankrupt?
- Bad Credit & Debt Consolidation Loan: Can I Get a Debt Consolidation Loan Even If I Have Bad Credit?