How does debt consolidation work you ask? Is it something you should consider to help you get out of debt? Let's have a look.
The first thing you should know is that the term "debt consolidation" is in itself, somewhat misleading (or at the very least "confusing"). Would it not be logical to assume that debt consolidation is the act of consolidating your debts? You would think so wouldn't you. But in fact, that is not always what is involved.
In my article "Debt Consolidation: A Tale Of Two Options"
I take you
through a detailed explanation of the two very different meanings of
the term as it is used today. Understanding the differences is critical
if you are considering consolidation as a debt relief option.
Having said that, 9 times out of 10 a company offering "debt consolidation" will not be offering a new loan to pay-off and "consolidate" your existing debts. Rather, they will be offering a service whereby they will be consolidating your debt payments into one single payment. But that is just part of it. A debt consolidation program can also help with the following...
Now that we have answered the question "how does debt consolidation work?" and looked at "how debt consolidation does not work", let's try and answer an even more important question. Will it work for you, and how much time and money can you save on a debt consolidation program?
Unfortunately, to answer these two questions, I would require some information about your financial situation, starting with a list of your debts and your income streams. The best way to get these questions answered would be to speak to a credit counseling/debt consolidation company. They will take a look at your debt situation, offer some advice and give you an estimate of what you could save by using a debt consolidation program. Reputable companies will offer this for free with no further obligation on your part.
Where can you find these companies? The best way is to search online
where you can find counselors that work right within your neighborhood
(if you prefer to meet with someone face to face), or find other
companies that offer full service online counseling if that is more
convenient for you.
I hope that answers the question "how does debt consolidation work?". Feel free to poke around the site and learn as much as you can about getting out of debt. Remember, informing and educating yourself is the first step on your debt freedom journey.