Advantages and disadvantages of consolidating debt
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Debt consolidation is something that people come to consider when and if they find themselves dealing with the burden of debt.
Your obligation is just to make the repayments on time.
Other than that you are left to manage your money as before.
This is because the bank will add interest to the consolidation loan. Mortgage debt is secured against your home If you consolidate debt using a mortgage or secured loan this then becomes secured against your property.
However using a secured loan to manage manage a debt problem will only work if you change the reason you got into debt.
If you continue to use credit cards and spend beyond your means it is likely that your debt problem will just get worse.
Your Credit Rating is not effected Consolidation simply involves paying off a number of smaller debts with one larger loan.
None of the older debt agreements are being broken as part of this process. Given this your credit rating will not be negatively effected in any way.2.