Is Debt Consolidation Good?

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Debt consolidation is not good because it can cause a person to lose their home and because it raises a flag that is placed on a person's credit history. Discover why lenders don't like debt consolidation with help from the owner of a debt negotiation company in this free video on debt and money management.

Part of the Video Series: Debt Consolidation & Management
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Video Transcript

My name is Peter Repak. I am the owner of Clear Financial LLC, a debt negotiation company. Is debt consolidation good? Well, no. Here's the reason why. Because you can do two methods. One of them is to consolidate all of your debt into your house. A credit card debt is an unsecured debt. If you're not paying that one or you're falling behind nothing is really going to happen besides you're going to have a bunch of collection agents calling you. If you don't pay your house though, then what's going to happen that they are going to foreclose on your home and you will lose your house. And that's not really a good thing. The other method is what the credit card companies want you to do is called a consumer credit counseling agency. Consumer credit counseling agencies were set up by the banks themselves. Of course they want you to go to them. However what you have to understand. Instead of four years what they telling you on the telephone, that's how long it's going to get to you, to get out of debt. What you need to know is takes about 8 to 12 years to get out of debt. And all you're going to do is lower maybe the interest rate but you're still going to have to pay the same amount of money that you owe and it's not really going to help you because it also going to make an automatic flag on your credit history that you're unable to handle your debt. And at that time no one wants to lend you money because you can't handle your own finances and on top of that, what happens is, you still owe the same amount of money. So your debt to income ration stays as it was before. So lenders don't like that. Thank you very much. My name is Peter Repak, the owner of Clear Financial LLC, a debt negotiation company.

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