THE NOTION OF “CONSOLIDATING” (bringing together into a single whole) your loans may seem like a good idea, since it simplifies the complexities of having too many bills that are out of control. However, there is more to debt consolidation that should be understood. Many “debt consolidation” programs are merely a way of transferring your outstanding bills into a home equity loan.
In other words, using the equity built up in your home to repay all of your unsecured debts.
Although these types of loan programs often include significant fees and can extend the amount of time to get out of debt, there is something more important to consider:
Debt consolidation loans work by converting your current unsecured debts into secured debt. More specifically, debt which is secured by your home.
What that means is that if in the future you fall behind on your payments you could risk losing your home. That kind of risk does not exist with your current unsecured debt.
If you have questions about your existing credit situation, and would like to learn more about getting out of debt, without bankruptcy, contact one of our professional debt negotiation specialists by clicking “Contact EFS” for a free consultation.