Getting debt consolidation counseling can be like playing Truth or Lie?

Perhaps you've played it at a party or something. Everybody makes three statements about themselves; two are truth and one is a lie. The goal is to guess which one is the lie. The biggest difference is that you're likely to hear more lies than truths.

Here are five of the biggest lies about debt consolidation counseling:

1. All programs are the same. There are several different ways to consolidate debt, and there are other ways to get out of debt. You can consolidate debt with an unsecured loan, a high-limit credit card, a home equity loan or by refinancing your home. You can go through a finance company, a bank, credit union or mortgage company. Each lender and each program is different and it's important to shop around before you decide on a consolidation loan.
2. Consolidating pays off your debt. No! Consolidation only rolls all your small debts into one large debt. Beware! You'll probably be given the opportunity to borrow even more money so that you have a "little extra" cash.

   Debt consolidation counseling that leads you to believe you're paying off debt is downright dangerous. It makes you more likely to use those credit cards again, and get even deeper in debt instead of getting out.

3. You need to consolidate in order to get out of debt. Consolidation does not get you out of debt. The only ways to get out of debt are credit negotiation, bankruptcy and paying off your debts. Credit negotiation and bankruptcy won't eliminate all your debt, either, but they will eliminate your credit rating (which may not be a bad thing; it keeps you from accumulating more debt). Debt counseling that pushes consolidation as the only way to get out of debt is intended to sell you something - another loan.
4. Debt consolidation always saves you money. Debt consolidation can save you money if you use your home equity to secure a consolidation loan, if you get an interest rate lower than what you're currently paying, if you pay the loan off in a short period of time and if the closing costs, loan origination fees and other loan expenses don't offset the savings you gain in interest. That's a lot of if's. Most of the time, debt consolidation costs you more than it saves.
5. Debt consolidation counselors are the only people knowledgeable enough to really help you. The truth is, most "counselors" profit from selling you a loan. That means they are most likely scamming you.

If you want truthful, reliable debt consolidation counseling, go to a CPA or a non-profit credit counseling organization. They won't give you an easy out; they will tell you the truth about debt consolidation - which is, be very careful. Most of the time, it's just not a good idea.

» Debt Consolidation Credit Counseling - Should You Seek Counseling?
Seeking debt consolidation credit counseling is something millions of American do every year. The advice they receive varies widely depending on the source.

» Debt Consolidation Help - Who Should You Trust?
Debt consolidation help can be found fairly easily. In fact, the Debt-to-Income.com website provides a complete library of free tools and resources.

» Debt Consolidation Home Equity Loan - Which Loan Is Best?
Using a debt consolidation home equity loan may be a tool you wish to consider as you create your debt relief plan, with an overall goal of becoming debt free.

Return to "Main Articles" Page from.... debt consolidation counseling article.