Debt Consolidation Loans or Debt Counselling

When people are deeply in debt, there is a fear and embarrassment like no other. Every bill that comes in monthly inspires anxiety, provokes psychological fear and depression. This fear may cause physical shaking, headaches and a variety of other symptoms. It is no fun having bills to pay and not knowing how you are going to pay them. When someone who is in such a desperate situation learns about debt consolidation loans, it may seem as if it is the solution to all their problems. After all, someone is offering to pay off their loans and then they can pay them back with one monthly payment. Unfortunately, this may not be the best option for the individual as the unthinkable can happen and the person can get into more debt.

Debt Consolidation Loans Danger

When a person takes on a loan like this they must make sure they can meet the terms of repayment. Secured debt consolidation loans tend to have very low interest rates and so the first instinct of a person in debt is to get this type of loan. However, as stated before it may not be the best idea because if one month passes and the individual cannot pay they are in danger of losing some of the assets used to secure the loan. More often than not people use their homes to secure these loans. Here, you can clearly see the danger of ending up homeless, if one runs into trouble with repayment of these loans.

The state of your credit directly impacts the terms under which you get the loan, for example, if you have very poor credit, in order to compensate for this you will have to receive a higher interest rate and pay off your loan over a longer period of time in order to make sure that you can meet the monthly payments with a certain level of ease. This of course means that it will take longer for the loan to be finished and you will end up paying more. With loan consolidation you might also run the danger of falling into more credit card debt if you are not disciplined enough to manage it well, this is because your credit card will now be cleared of all charges and the temptation to use it might become too much for some to resist.

Instead of even considering debt consolidation loans it is often better to get debt counselling. If you don't know where to start, visit our website at debtcafe.ca for a free consultation. Instead of paying off all your

Debt Counselling Can Help!

debt with one big loan and then paying back one monthly payment which has so any pitfalls. Debt counselling involves negotiating with your creditors. This is done for you by your debt counsellor. During this period the counsellor will take a look at all your assets before beginning the negotiation process. The counsellor will often be successful in getting you lowered monthly payments and even a removal of late payment fees. In some instances debt counsellors have been able to get as much as 50 to 60 percent reductions in monthly paybacks. You can even arrange for the counsellor to make the payments for you, this provides you with someone to be accountable to, so that you can create a certain level of discipline in paying back your debt. This solution is the best way to keep control of your finances while attempting to secure your financial future.