People in debt will often try out all sorts of crazy things to get out of debt. However,  when collecting cans and bottles, staging constant yard sales, and placing money on the longshot to finish first in the Kentucky Derby*  yields little to no extra income, some look for a more responsible way to restructure their debts. One of these ways is often debt consolidation.

Here are a couple of reasons why debt consolidation can be a good solution:

-Perhaps the biggest reason is interest rates. Individual credit cards can charge exorbitant interest rates. This is a dangerous situation if someone ever wants to emerge from debt. Each month, even if the card has been cut up and not used in years, the debt continues to grow. If you have high interest rates on credit cards, there is a chance that debt consolidation can lower that rate.

- We all lead busy lives and when it’s time to pay the bills mistakes can be made. Some bills need to be paid now, some later, and they all have to get to different places. Debt consolidation can streamline this process and, hopefully, take all that debt and funnel it into just one payment.

However, these advantages lull people into believing that there is no downside to debt consolidation. Many people struggle to make the minimum payment, which leads to late charges adding to the mounting debt. As shows, the average late fees run from $15 to $35, and if the payment is not made in 30 days, the company can mark your credit report, making a bad situation even worse.

Not only do you need to decide if the process is right for you, you should also conduct in depth research into the company you are placing in charge of your debt consolidation.

Here are some questions to ask or research:

-Is this company reputable? Seek out online testimonials from people that have used their services.

-How long has the company been in business?

-Have they ever been accused of predatory lending?

-Will interest rates on the loan go up over time?

-What happens if a payment is missed?

Finally, you need to understand that once you go down the debt consolidation road, there is no turning back. Also consider that, as aggressive as your credit card companies may have been in trying to get money out of you, debt consolidation firms will be even tougher. Remember that, in most cases, they already know that you have problems paying your bills.

In other words, if you are trying to replace multiple creditors that you didn’t intend to pay with only one creditor that you don’t intend to pay, debt consolidation is not for you.

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