Why Debt Consolidation Is A Big No-No
When we are struggling to promptly make some of our debt payments, we are tempted to get into a debt management plan. Debt management is based around the concept of debt consolidation in an attempt to lower some of the interest your debts attract.
Consolidation as a means of debt management is especially tricky for people who cannot restrict their use of credit cards. Debt consolidation includes the summation of all your existing debts into one debt. This move would require someone with enough discipline not to run up the balance of their credit card again.
Never take advantage of the low interest rates offered by home equity loans to help pay your credit card payments. This move can really work against you in the event that you run up your balances. Never be tempted to enroll in credit repair clinics, they will charge you an exorbitant fee to ‘fix’ your credit record. All these actions may seem to help you in debt management but they are only getting you into a bigger mess.
In the event you are able to free yourself from debt through debt management, it is very important for you to stay within your financial capabilities. First and foremost, make a practical budget that you will follow to the tee. Secondly, come up with a way to handle credit card; it is important to remember that if they got you into debt the first time, they can do it again.
Sometimes we are so deep in debt that even debt management plans cannot revive us to financial health. In the event that we find ourselves in that situation, it is important to be armed with the following information:
• Debt collectors have no rights whatsoever to harass you or any third party that may be representing you.
• There is no law that criminalizes the inability to pay debts.
• No one should threaten you with imprisonment for being unable to pay debts.