Is Consolidating Money Owed Most Suitable In Your Case? Not Automatically

By Author: Nicholas Hunt
Total Articles: 434
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With financial anxieties so wide-spread immediately after the economic chaos of recent years, a myriad of people all over the globe are looking for the easiest way out of their personal debt troubles. Even with the decreased supply of credit around the world, there are still plenty of refinance providers that are touting debt consolidation finance as a way out of financial difficulty.

These firms say that you can clear up all of your debt trouble by moving all of your current debts with each other into one less costly one, leaving you with just one, comfortably affordable monthly instalment that would release you from cash issues and financial pressure, even staying away from the risk of residential foreclosures and a bankruptcy proceeding. There is certainly an element of truth in this, because if you effectively merge your finances in a smart way you certainly should finish up with a far more affordable and less complicated regular spending plan, with the bringing down of strain and worry that can follow.

However, this doesn't mean that consolidation is correct for you. The primary predicament is the fact that ...
... if you've already amassed sizeable debts, consolidation isn't likely to help unless you improve your financial prospects. It's much too simple to follow consolidation by a spending spree due to the easing of financial pressure, leaving you deeper in debt than previously.

The 2nd, and even more serious, problem is that of converting unsecured debt into secured. Unsettled money owed on store cards etc can bring about problems involving damaged credit scoring, legal action, lenders, for example, but none of this threatens your home. No-one can seize your house over an credit card debt.

Once you have consolidated your debts into a secured loan, however, that changes. If you can't make your repayments, you might find your dwelling foreclosed on causing you to be still in debt but homeless on top of that. Because of this, it's extremely important to effectively plan how you're going to fulfill your repayments relating to the new loan - it's no good putting off addressing your fiscal problems in such a way that could be only going to make them much worse eventually.

About the author: Nicholas writes for http://www.debtnation.co.uk where you can find a wealth of information on dealing with debt problems, including more information on debt consolidation at http://www.debtnation.co.uk/debt-consolidation.html