Debt Consolidation for Americans

Times are hard for many Americans, with interest rates going up, sky high gas prices, and overall inflation, so it's not surprising that many families find themselves in financial difficulty that's frightening enough to cause them to seek professional help.

When faced with mounting financial obligations, it's easy to fall prey to any number of the advertisements you see on television, in magazines and newspapers, on the radio, in your email box, or on the Internet, promising to either eliminate your debt altogether--or to "consolidate" your debt. In this article, we're going to look at how the debt consolidation process works.

It's a tempting thing to have a company take all your bills, roll them into one package, and then have you pay them off with one lump monthly payment, often less than the combined total of your individual bills. But let's look at what's really involved. The pitch is that debt consolidation companies will reduce your monthly payment on what's known in the industry as UNSECURED DEBT, which includes credit cards, utilities, or anything else you bought that wasn't secured by a piece of property that could be foreclosed upon by the lender. Your home mortgage, on the other hand, is a secured debt, which is the key to how debt consolidation companies function.

When you contact a debt consolidation company, the first thing you'll find yourself doing is answering a number of questions concerning your home--how much equity you have, your monthly payments, how long you've been in the home, and other things. Since your home mortgage can (and often is) the largest monthly payment you have, you might be lulled into thinking that they're merely asking in order to add your house payment into your monthly debt total.

However, there's something potentially ominous behind those seemingly innocent questions. The company is asking questions about what's generally the most valuable asset of a family--their home. Why? Because their plan is to combine all your unsecured debt and turning it into SECURED debt--by tying it to your home.

There are several potential dangers involved in that. First, if you find that you can't make the new, lower payments in the future, you'll find yourself not only continuing to have bad credit (which is something that you could ultimately live with, even as difficult as it would be). But you could actually find yourself losing your HOME, as well--a situation that could be life-threatening!

But debt consolidation companies say they can lower your monthly payments by a significant amount, and that's why you sought their help, right? Well, your must understand that the debt consolidation company won't lower either your overall debt load or interest rates. What they'll do is extend the life of your loans by transferring them from short-term (1-3 years) into long-term loans, which can take as long as 30 YEARS to pay off. You may lower your monthly payment, but you'll be paying up to THREE TIMES as much for those things you owe money on--for DECADES to come!

So, regardless of how much debt you're faced with, be smart, and before you sign with a debt consolidation company, ask them EXACTLY how they plan to help you, how long it will take to pay off your debt, and what they'll get out of it, since they're in business to make money, just like every other company in the world.

Copyright © Jeanette J. Fisher

About the author:
Jeanette Fisher teaches how to get out from under credit card debt and how to use credit to make money. Free ebook "Credit Tips" worryfreecredit.com

More Finance information like Jeanette Joy Fisher's at Credit-Voitures.com

How much did you learn from this article?

Not yet Rated

Click the XML Icon to Receive Debt Consolidation Articles Via RSS!

Additional Articles From - Home | Finance | Debt Consolidation

The Benefits of Debt Consolidation - By : michael gentleman
The Best Credit Card Consolidation Loans for Debt Problems - By : Stacey Reid
What is Debt Settlement? - By : michael gentleman
What is Debt Consolidation and How Does It Work? - By : michael gentleman
Financial Freedom - 3 Things You Must Do & 3 Things You Must Avoid to Achieve It - By : Ann Marosy
Is Debt Settlement Right For Me? - By : michael gentleman
Why Get a Bad Credit Short Term Loan? - By : michael gentleman
What Students Should Look For in Visa Student Credit Cards - By : Stacey Reid
Huge Debtors Need Debt Consolidation Information - By : Stacey Reid
The Reality of Needing Bill Consolidation Loans - By : Stacey Reid

This Article

	Blog This
	Print This Article
	Post Comment
	Add To Favorites
	Email it
	Ezine Ready
View in your own language (translate) Using Google™ Tanslator

Webmasters/Ezine Tools

Top Authors
Most Popular Articles
Ezine Notifications
Article RSS Feeds

Additional resources

Credit-Voitures.com

Link to Us
Contact Us
Privacy Policy
Terms of Service

Monetize Your Site

Get 1750 private label articles and 15 reports EVERY SINGLE MONTH!

Promote Ebooks with ClickBank
PayDotCom

CPA Empire
Modern Click

The Affiliate Classroom
The Science of Getting Rich

This site is hosted with

Finance News

Click the embed button to show this video box on your site

Click the embed button to show this article box on your site

© 2007 Credit-Voitures.com™ All Right Protected.
Use of our free service is protected by our Privacy Policy and Terms of Service

Disclaimer All articles published by www.Credit-Voitures.com are for informational purposes only.
All articles are not meant to be used for legal, medical, or any other type of advice.
If you require such advise, please refer to a certified expert.