Common Myths About
Common Myths About
A lot of people are coming up with the wrong assumptions about
debt relief because they are confused about the similarities and
differences of each program. Debt consolidation is probably
where most consumers are having a difficult time
understanding because it is such a broad debt relief term to
Debt consolidation simply refers to the efforts of a debtor to
simplify their debt payment methods by combining their funds
into one manageable payment scheme. The goal is to make
the process easier so as to make debt relief more attainable.
The two words alone does not necessarily signify debt
consolidation loans. Not all consolidation efforts need a loan to
make it possible.
Credit Counseling/Debt Management
Myth: All programsarethesame.
Fact: Thegeneral ideaof debt consolidation may bethesamebut
thedetailswill vary depending on theuniquesituation of the
debtor. It isvery important that you identify your financial
weaknessesand strengthsand discussit with your credit
counselor. Thiswill help you comeup with aplan that issuited
to your capabilitiesand will haveahigher chanceof success.
Myth: All credit counseling agenciesarenon-profit organizations.
Fact: Whilemost of them arenot for profit, therearecompanieswho
offer paid services. They arestill legitimatebut besureto conduct
your duediligenceto becertain.
Myth: Credit counseling agencieshavevarying creditor payment
Fact: Thecreditor benefitshavebeen standardized throughout the
industry so you will rarely find acompany that offersabetter one.
However, your credit counsellor will aim to provideyou with a
payment plan that you can afford to pay for. Should you beunableto
afford that, your chancesof getting alower schemewith another
credit counseling agency islow. Instead of searching for adifferent
company, you will also beadvised to shift to adifferent debt relief
program altogether. Debt settlement and bankruptcy aretwo other
optionsthat hasalower monthly payment plan.
Debt Consolidation Loans
Myth: A collateral isalwaysneeded.
Fact: You do not need acollateral to avail of adebt consolidation loan.
However, therearebenefitsto bemadewhen you avail of asecured
loan likelower interest rates. Thisisprobably why aHomeEquity
loan isthemost pursued typeof debt consolidation loan.
Myth: You need agood credit score.
Fact: Likeacollateral, agood credit scorewill help you acquirelower
interest ratesbut it doesnot definewhether you will begranted aloan
or not. Even thosewith bad credit scorescan still opt for adebt
consolidation loan aslong asthey havethemeansto pay for it and the
overall monthly amount isnot greater than thecurrent.
Myth: A loan isthebest way to get out of debt.
Fact: Thereareother optionsto get out of debt and each of them arebest
for particular financial situations. It isstill best to consult an expert
about it or at least analyzeyour financescarefully to know what isthe
best debt relief option to take.