Is Debt Consolidation the Right Solution?

By | February 1, 2013

Being in debt is a situation that most people want to change. Having debts hanging over you can make life feel like it’s out of control. It can add stress to your relationship, your daily life and it can interfere with your sleep and health as well.

The problem is that getting into debt is easy, but getting out of it is much harder. If you miss payments then the interest that you owe will spiral upwards. You’ll have creditors chasing you and that can add to your level of stress. It’s all too easy to find new credit cards to put expenses onto, but paying them off is a different matter.

What you have to do though, is confront the problem. Putting debt repayments off or trying to push them to the back of your mind will just make the situation worse. Taking positive action to start paying off debts will help you enormously mentally, as you’ll begin to feel you’re moving towards being clear of debt.

There are different ways to go about paying off multiple loans and credit cards but one popular choice is use a debt consolidation loan. This is where you pay off all your existing debts to multiple creditors by taking out one large loan to cover all the existing debt and interest outstanding. Often you can get a lower interest rate for the consolidation loan than you would pay by paying off each debt separately. Old debts are paid off, and you have one new loan to pay, with one monthly payment to find rather than several. It also means that you only have one point of contact for your debt, which lifts the administrative hassle from the situation.

However, you need to understand that debt consolidation does not eradicate your debt and free you up to spend again. You still have to pay it off, and you need the self-discipline not to apply for fresh credit cards and store cards until you have cleared the debt consolidation loan. Many people find that they can’t resist spending again, because the debt consolidation makes it feel like their debts have been paid, and they end up in the same situation they started in.

Debt consolidation is not something you should enter into without proper consideration. However, it is a sensible choice for some people who otherwise might get so far in debt that they see declaring bankruptcy as their only choice. Declaring bankruptcy can be detrimental in terms of your credit record and the safety of your assets, so if you can avoid it through options such as debt consolidation it is much better.

Bio: Gemma has now been debt-free for three years. Rather than face the implications of bankruptcy she found that debt consolidation was the best option for her. While everyone’s situation is different but hopes that through writing she can offer advice to others who might be struggling with debt.

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