Has it is with other human sociological phenomena, Debt consolidation has acquired some form of notoriety and mysticism among humans due to a complete lack of information concerning its meaning and modules operand-in.
A myth according to the Oxford dictionary of English language is a widely held but false belief or idea, a misinterpretation of the truth.
In This article, I will knock burst the bubble of the seven biggest myth concerning debt consolidation
Debt consolidation simply is a form of debt refinancing, a tool or strategy used by financial advisors or debt management organizations and countries, it entails taking off a new loan presumably with the lower interest rate to pay off all other existing loans.
1.one of the widely held notion false notion about debt consolidation says that credit counseling and debt management plans are one and the same. Farther from the truth credit counseling involves a financial advisor or counselor reviewing all of your debt and assisting in preparing a budget/plan of how to exit the indebtedness through properly scheduling the payment of all the loans over a period of time. Debt management plan, on the other hand, involves your credit counselor going into an arrangement with your creditors with the aim of lowering the interest to be paid on your existing loans.
2.Another myth concerning debt consolidation is the belief often held by individuals and corporate organization that debt settlement is the cheapest way to achieve debt consolidation. Debt settlement is not the cheapest of all debt relief strategy and in fact, debt settlement comes with some sacrifices you have to make e.g sacrificing your credit score or rating.
3.Believing that a debt consolidation loan will save you money is also a myth and not the reality. Paying out your loan is by far the cheapest because, in the long run, you will pay more for a consolidated loan since it usually lasts long and attracts additional interest due to its longevity
4.Another widely held belief among Americans who are not financially savvy concerning debt consolidation is the notion that credit counselor will help reduce their debt by 50%. This notion is also not totally true. A credit counselor only helps to reschedule your loan repayment plan and does not help reduce by half your loans.
5.One of the biggest myth in the financial circle is the belief that bankruptcy will ruin your financial life. Dealing with bankruptcy in one’s background is a better alternative to going to food and shelter.
6.Thinking that it is impossible to get out of debt without a formal program is utterly untrue, it is a myth and you can indeed gain financial freedom and stay out of debt via a DIY debt management program.
7.Finally believing that some company offers lower consolidated loan rate than others might turn out to be a myth. The teaser ad that informs your belief has conditions attached to them that might disqualify you from obtaining consolidation loans with such advertised lower interest.
The forgoing are seven of the biggest debt consolidation myth and the truth about these myths. Further educating yourself by consulting a reputable debt management company will broaden your horizon about financial matters.