Low Interest rates temp some consumers to take on additional debt to ease existing credit woes. The goal is to consolidate various higher-interest balances into one, easier-to-handle and less-costly loan payment.
"You're getting symptomatic relief, not a credit cure," say some credit counselors.
The approach of replacing several loans with one consolidation loan approach can take several forms. There are debt consolodation loans, balance transfers to a zero-percent credit card and home equity loans or lines of credit.
Most Americans who take out a home equity loan or other type of loan to pay off credit cards end up with the same (if not higher) debt load within two years.
These statistics underscore a major problem with debt consolodation: It feeds upon the tendencies that got you in trouble in the first place. By taking on yet another creditor, you're adding the proverbial fuel to the fire. In this case, it's your money that's burning.
Also, if you've taken on so much debt that you're looking for more as a solution, chances are you won't qualify for the very low interest rates you see advertised. Those generally go to people with stellar credit ratings and do need the money anyway.
However, if you're at the end of your credit rope or swear that this time you'll be more disciplined, debt consolidation may be something to consider despite its risks.
In our opinion it is best to allow a competent debt settlement attorney reduce your balance and monthly payment by negotiating with your creditors. Contact us for references of debt settlement lawyers with a good track record of reducing debts.
Disclaimer Legal Information Is Not Legal Advice This site provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
Consumer Credit Counseling Information, Debt Management Plan Information, Debt Settlement Plan information, Credit Counseling, Credit Score, Consumer Credit Counseling Service, CCCS, Bill Consolidation, Credit Repair, and Debt Consolidation is not advice, and we recommend you consult a licensed credit counseling agency, debt settlement attorney, and/or licensed debt management plan administrator in your state if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.
