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Debt Consolidation Not
Always the Answer – The Debt Counsellors
The Debt
Counsellors say debt consolidation should only be entered into once
the details of an agreement have been properly scrutinised and
professional advice has been taken.
(PRWEB) April
16, 2006 -- Debt help experts The Debt Counsellors warn that
debt consolidation is not always an effective solution when
dealing with personal debt problems.
Debt is a growing problem in the UK and debt consolidation, whereby
multiple debts are replaced by one larger debt to cover them all, is a
common first step in managing a debt problem.
However, The Debt Counsellors warn that debt consolidation can
actually make debt problems worse if the terms of the agreement are
not looked at carefully enough.
John Porter, a senior counsellor with the debt advice organisation,
explains: "Debt consolidation can seem like a good idea and often it
is, because it is easier to deal with one debt rather than pay lots of
different bills every month and deal with lots of different creditors.
"But many people with debts jump into an agreement because of this
without looking into how much they are actually paying for the
privilege. There's nothing wrong with consolidating debt when the
overall interest or final payment total is reduced, but this isn't
always the case."
Porter adds: "Unfortunately, many people with debt problems have made
their situation worse with debt consolidation by signing up to an
agreement that charges more interest than is being paid for all the
individual debts combined. Sometimes the term of the loan is longer,
which means it is more expensive in the long run."
Another factor, says Porter, is that turning multiple debts into one
debt can wrongly be seen as a green light to take out more loans or
credit cards.
Porter says: "Suddenly, there is one bill to deal with instead of
many, so someone might think, 'What harm will one more debt do?' But,
of course, it's a slippery slope."
With this in mind, The Debt Counsellors urge anyone considering debt
consolidation to seek professional advice on their situation to find
out if the deal makes financial sense and to see if there is a more
suitable solution for their debt problem.
For more on
UK
debt and debt consolidation, visit
http://www.debtcounsellors.co.uk
Source: PRweb.com
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