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Top 5 Debt Consolidation Myths

Published by admin on November 24, 2009

Top 5 Debt Consolidation Myths

Debt consolidation like any popular financial service out there is full of myths. In this articles we are going to differentiate what is fact and what it myth when it comes to debt consolidation. We are going to do this by presenting you 5 debt consolidation myths that are the most popular right now in 2009.

Debt Consolidation Myth #1: Debt consolidation, debt settlement, credit counseling and debt management programs are all the same thing!

The truth is that all these are completely different services. For example the credit counseling is not going to give you any loan or combine all your payments (for example the payments for the cash advance or payday advance you have) into one or lower you current monthly debt bill, but it’s going to give you the information you need in order to make a budget and get through these tough times.

Debt management programs, which is also known as DMPs represent one of the tools that credit counseling companies are using to get you out of debt. The statistics are showing that on average 35% of the people in debt that are calling credit counseling companies they actually need a DMP, and they can benefit from one.

All these are different services and usually the moment you are going to call a debt consolidation company and talk to a debt expert, he is going to tell you exactly what type of services you need.

Debt Consolidation Myth #2: The credit counseling companies or debt consolidation companies are able to cut your monthly payments into HALF!

Unfortunately: NO SUCH LUCK for you mate! This numbers that most online debt consolidation companies are claiming is only valid into a small number of circumstances. This means that the probabilities for you to pay only half of your current debt bill are very small.

Debt Consolidation Myth #3: Getting a debt consolidation loan is EXTREMELY EASY!

The real truth about debt consolidation loans is that it’s not that easy to get. Since you have already missed some payments, it means that your credit score is currently going down, this means that getting a new loan is going to be pretty difficult, unless the interest rate is very high. However on most cases the debt consolidation loan is going to hold a smaller interest rate compared to the one that is being offered to you at the credit cards you have.

Debt Consolidation Myth #4: Debt consolidation companies are going to take care of everything… NOTHING left for YOU TO DO!

The debt consolidation companies might sometimes promise to you that they will take care of the negotiation with your creditors and reduce your current interest rate and along with that reduce your current monthly payments. But you will still have to make payments to that debt consolidation company so it’s going to be mostly up to you to get out of debt in the end, since you are going to be the one that actually pays the money.

Debt Consolidation Myth #5: Bankruptcy should never be the right call in absolutely no circumstances. NEVER!

The truth is that in case you have been laid off from your job, or your salary is reduced or for whatever other reason you are no longer able to deal with your debt in an extreme way. Even if you will not be able to take any loan for the next 7-10 years from now on, you will still be able to keep your house from being foreclosed or keep your car. You just have to take into consideration what is the best option available and look at ALL THE OPTIONS. However we suggest that you first try out a debt consolidation program and it might work out for you this way. There are plenty of offers to choose from on our website.

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