Your debt is still there- you’ve just moved it
Many people head into debt consolidation thinking that their debts will magically disappear. This isn’t the case. You need to keep in mind that debt consolidation is simply a process of debt displacement.
Don’t mistakenly expect debt consolidation to be a remedy for the underlying problem.
You need to take the necessary steps to figure out how you got into debt in the first place. Then you need to identify the bad habits that you need you get rid of so that you can get out of debt.
If you aren’t disciplined, debt consolidation won’t work.
You need to make sure that you stick to the debt repayment plan so that you pay your debt off. If you continue spending recklessly debt consolidation won’t work for you.
You could lose your home if you use it for consolidation
The danger of using a home loan to consolidate your debt is the risk of losing your home if you default.
High fees to contend with
There are high fees that come with the debt consolidation process. You can expect to be charged high upfront fees and interest rates.
You end up paying a lot in the long run
Debt consolidation loans are usually stretched over a long period, so you end up paying a very expensive debt in the long run.
Access to cash can be tempting
It can lead to more debt. Without discipline, consumers may be tempted to spend more.
Potential for affected credit score
You may end up damaging your credit through the act of consolidation.
May not be ideal for debt relief
It may not be the best solution if you’re looking for debt relief. Debt settlement aims to reduce your debt burden rather than just reducing the number of creditors.
