Debt consolidation is a solution offered to many people these days with explaining some real weird theories about it and it I leading to creation of more and more myths about it. Here we’ll consider this debt consolidation in a simpler one and try to clear out whatever confusions arise in your mind. But first of all let’s see what credit consolidation is and how you may get benefit from this. It is simply paying many smaller loans by having a larger one with some collaterals and lesser interest rate.

The points to be discussed about this debt consolidation are:

1. It is for those who are unable to manage their money matters and who are not good financial planners. Those who are capable of saving and paying off money successfully should avoid this and it may not prove beneficial to them.

2. It is nowhere equivalent to bankruptcy or settlement because in this way you are not either having the title of a bad payer or negotiating with the original creditors about some relaxation in your debt conditions.

3. It is a compulsion for you to be a home owner to have secured debt consolidation. The profitable consolidation only results after offering something as collateral and you can’t do this unless you own your own real estate property of some great value.

4. It would never deteriorate your credit report or credit score but on other hand may prove helpful in improving this. As you are actually paying many small debts so your credit score may get improved in some cases.

5. It is not a tactic to reduce your debt but it is just a method of incorporating all of your debts into a single and a huge one. It doesn’t mean at any point that debt on you is lessened.

6. debt consolidation companies are actually not required in this whole process if you have the knowledge and you can negotiate well with the creditor you can do it on your own in much successful manner.

7. You may require the help of a finance lawyer or an outsider help for the whole legislator and documentation portion of the deal. Because it contain many minute points to be handled.

8. yes, a drawback of this debt consolidation is the difficulty in getting future loans that somewhere resembles bankruptcy but remember by paying the monthly amounts regularly and improving your credit score you can overcome this handicap.

9. You may get into a digging well of having more and more debts in your life and end up in many unpaid debts that will allow the creditors to sale your valuables. So try to handle it with much more caution and financial wisdom.

10. It is just like receiving from one person and paying the other one but you receive with a lesser interest rate that is the profit point.

11. You won’t be getting many payments calls daily for those small loans but yeah if you actually fail to pay this one you are at least going to receive one call.

12. It doesn’t allow you to write a debt note unlike in bankruptcy.