Cons of Debt Consolidation:
Debt consolidation isn’t the best choice for everyone, even if they may be approved by their financial institution. Those with poor credit or a high debt ratio may actually end up with a higher overall interest rate than they were paying originally, so while their bill payments have been reduced to one monthly loan, they will actually end up paying more than they need to over time to clear their debt.
Also, debt consolidation often encumbers your home or other assets as a means of security. This may cause you problems if you end up in financial trouble later in life, since you no longer have collateral available to obtain future loans, and you can no longer file for other credit services such as a consumer proposal.
If you are thinking about approaching your financial institution regarding a debt consolidation, consider meeting with a Licensed Insolvency Trustee to hear about all of your options. While a debt consolidation may very well be the best choice from you, you may benefit instead from a consumer proposal. This process also allows you to address your financial obligations by consolidating your debt and paying either a reduced amount to your creditors or paying the full amount over a longer period of time. Your Trustee will manage all of the dealings with your lenders, and oversee the arrangement until repayment is complete.