Debt Consolidation Pros and Cons

For all you debt sufferers out there, listen up: debt is awful! Debt steals all that is good about life, like puppies and sunshine and joy, and makes it into a steaming ball of misery. When you carry a huge amount of credit card debt, you suffer the plight of the imprisoned soul. Every waking moment of your life is consumed with thinking of how to pay down your debt and get relief from your awful situation.

Debt consolidation programs attempt to bring you debt relief by moving your debt from one place to another. That’s it. Anticlimactic, isn’t it? You thought the debt consolidation wizard was going to come over to your house and wave his magic wand over your debt and make it go away, didn’t you? Well that won’t happen. Debt consolidation just moves your debt from one place, to another.

So, what’s the benefit of debt consolidation?

Actually, there are two benefits:

• Convenience. By putting your debt under a single loan, you have only one payment to make every month.
• It actually does save you some money. If you are smart, and YOU ARE, then you’ll get a debt consolidation loan with a MUCH LOWER interest rate than your credit cards, which will save you on interest over the long term.

Alas, there are drawbacks to debt consolidation:

• Your debt isn’t really reduced. It’s just in a more convenient location.
• Debt consolidation loans actually take a long time to repay. Sometimes these loans take as long as the actual credit card, which could be upwards of a decade.

So, what to do, what to DO? Those of you who don’t want to deal with the hassles of debt consolidation should consider your other options. Bankruptcy used to be a way out for debtors who couldn’t feasibly repay their debt. Unfortunately for consumers (but fortunately for the big creditors) laws passed in 2005 made it much more difficult for the average debtor to shirk his or her financial burden.

You could just do nothing. Well, not nothing, exactly, but you could just not take any more action than you are already taking. You can keep paying your bills as best you can, hoping for a miracle - a winning lottery ticket or a large inheritance from a long-lost relative. Be advised: doing nothing won’t help you get out of debt. Hoping for relief won’t make it happen! You need to take action.

Author Bio: Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. Read additional articles by Drew on Debt Management, Credit Management and more.