The global debt crisis it seems has assumed epidemic proportions. As per new figures that came to light on World Debt Day (May 16), there are around 27 countries in the world that are currently under the threat of debt crisis and further 80% of the rest of the countries are well on the verge of that risk.
Now, with the global debt crisis clearly spiralling out of control, debt counselling and debt consolidation have emerged as potent ways to combat the predicament. If paid off on time, debt consolidation can actually turn out to be an excellent way in which you can keep your debts under control. The process entails combining different loans or debts in a unified debt program. You can reach out to reputed debt counselling programs running in your country in order to find out more about debt consolidation loan and eventually bail yourself out of trouble. Though borrowers today are largely aware of the existence of debt consolidation at the first place, not all have the right ideas regarding the way this process works. It should be noted that there are several misconceptions associated with this process. And, in the course of this post today we will try to address these myths.
Myth #1: Debt Counsellors ONLY help you with Debt Relief
The very first misconception about debt consolidation or for that matter, debt counsellors out there is regarding their scope of work. Let us tell you that the debt counsellors are not there just to zero in on the right program for you. If you qualify for a debt consolidation program, the counsellors will help you at every step starting from understanding your finances better and the loopholes in the ways you had gone on to managing your finances so far (that of course are the reasons why you failed to pay off your debts at the first place). At the end of a particular program you are not only debt-free but a highly “fiscally” informed individual. Now, you are deemed to be in better control of your finances. You are supposed to be well aware of the risks of debt trap and ways to avoid them as well.
Myth #2: Bankruptcy will not Hurt you that Much so you Shouldn’t Apply for Consolidation
There are many people around that might as well try to convince you that you should rather give programs like debt consolidation a miss quite simply because it is apparently hard to qualify for such a program and that it’s far easier to declare yourself as bankrupt. However, let us tell you that no matter what your friends have told you, bankruptcy has serious implications. You should only resort to it if you have cumulative debt amounting to something around $50,000 but have an annual salary of only $15,000 – $20,000.
Myth #3: Debt consolidation can cut your debt by 50%
Please do not believe this arbitrarily. Debt consolidators definitely have a more systematic way of working – For instance, you might as well have gone on to miss two payments each amounting to $200 and if the third payment due is $600 then a debt manager can chip in to get that payment modified to $200 and the rest of $400 will be added back to the total due.
It’s important to get rid of the most common myths about debt consolidation before enrolling for a program.