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Some Debt Consolidation Myths

You need to eliminate debt in your life anyway possible. One way that people do that is by going through debt consolidation. Debt consolidation is important to fully understand in order to make it work better for you. But there are also some myths about debt consolidation that need to be addressed. Here are some of the myths and why they are not correct.

Myths, Not Facts

  • Your life is over when you are bankrupt

One of the reasons you consolidate debt is so that you can avoid filing for bankruptcy. For this reason, sometimes people will consolidate at high rates in order to “consolidate”. This may not actually be consolidation and you might be paying more. Bankruptcy, even though it is bad, is not life ending. Would you rather file for bankruptcy and be able to keep the place you are living in, or get so deep in debt that you have to sell your house to get out of it? Bankruptcy will hurt your credit, but sometimes it can actually save your house.

  • When you consolidate, you always save money

Not true! Mistakes can often times be made. The mistake comes when you do not look at the rate you are being charged, and compare it with the rates you will be charged. Sometimes, granted not always, you could be charged more for consolidation than you would be if you kept your normal rate. That is when you find you will not save money. Consolidation for the sake of consolidation is something that can truly end up backfiring on you.

  • You need a program to get you out of debt

You do not always need help to get yourself out of debt. If you have small debts, then you can get rid of those with solid money management. You need to know your money and make it work for you. Creating a budget and managing what you spend will truly help out. Just be smart about where your money goes.

Consolidate If It Helps

This is the main thing to remember. You need to do your research and only consolidate if it is going to help you out. If you find that you get the same rate or a higher rate, then you will want to stay away. It is not worth your time or money to get the same rate, and it is definitely not worth it if you are going to get a higher rate. Do your homework, and make sure you get the best deal.

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