Truth Of Debt Consolidation
All over the world, people are now struggling with money problems that were not a factor just a few years ago. In the United States, more Americans are struggling with debt, worried about foreclosure and contemplating bankruptcy in the worst recession since the Great Depression. Commercials on television and advertisements on the Internet promise debt relief solutions, and many wonder if these program are helpful.
One such promise of debt relief is debt consolidation.
Debt consolidation promises to lower your overall debt by combining all your credit card bills into one lump sum that is lower than your overall monthly debt. The debt consolidator now pays your creditors from this new pool of money. While this seems like a great idea, what happens is now the long term cost of the debt is increased by a higher APR rate plus the consolidator adds a 10% fee for himself. Also, this unsecured debt is transferred to your secured debt like your house and if you miss a few payments they can now take your property.
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