Here are the downsides of debt consolidation, in general: Although all debt consolidation works in largely the same way, there are several different methods you can use that do the same thing.
The different methods of debt consolidation have benefits and risks associated with each specific option, so it’s important to understand these so you can decide which way is the right way to consolidate for you.
(You can learn more about , which could lead to a lawsuit, the CFPB says.
Not paying creditors will also show up as a negative transaction on your credit report that makes it harder to borrow more money.
When researching loan consolidation options, you may come across what’s known as debt consolidation companies.
Some of these are legitimate, according to the Consumer Financial Protection Bureau, however, others are incredibly risky.
Their debt management plans can help you get back on track -- but they can also be unnecessary and even detrimental when done through a poorly run organization or for the wrong reasons. These agencies do not make loans, nor do they settle debts.So it’s important to understand the upsides and downsides of debt consolidation before sign up for anything to solve your debt problems.The information below can help you understand the advantages and disadvantages of debt consolidation, in general, as well as the pros and cons of specific consolidation options you can use., into one single bill that’s paid off with a loan.There are dozens of ways to do this, and some include transferring debt to a zero or low-interest credit card, taking out a debt consolidation loan, applying for a home equity loan or paying back your debt through a debt repayment plan.