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As getting into debt becomes more common in tough economic environments, people begin searching for feasible solutions to get them out. Debt consolidation is one such solution. Debt consolidation is a service that allows people to escape the pressure of having to pay several different creditors at once. The process begins by combining all outstanding loans into one secured, long-term loan. Debt consolidation, however, does come with ups and downs. Is debt consolidation an option for you? You need to seriously weigh the pros and cons. Having a single creditor and a fixed interest rate are two reasons why people appreciate the debt consolidation option. It enables better debt management. You are less likely to miss a payment because you only have the one creditor to pay each month. In addition, you will have a fixed rate so you will know exactly how much you owe each month. In layman's terms, you always know what amount is due each month with no unexpected fluctuations. Debt consolidation, however, does have its drawbacks. The interest rates might be appealing to you, but keep in mind that you will pay more later on. Debt consolidation loans will require you to make payments for as many as thirty years. Therefore, the final figure, including the accumulated interest, will be a lot higher than what you would have otherwise paid if you had not consolidated your loans. Don't bother getting a debt consolidation loan if you do not have something to put up as collateral. Unsecured debt consolidation loans come with extremely high interest rates. Typically, you will have to use your home to secure a debt consolidation loan. This way, these assets can be seized and auctioned off if the debtor defaults on paying off his debt. Tax breaks from the debt consolidation loan is a major reason why people decide to do it. Though there are no tax benefits on consumer debt such as credit cards, consolidating your debt into a single loan with your home as security makes it a mortgage. The interest on your mortgage is tax-deductible. Debt consolidation will also have an impact on your credit rating. No longer will you have many different outstanding loans on your credit report. Instead, you will have just one. When you have a lower number of outstanding debts, other creditors may be more inclined to extend you another loan. Since credit is most likely what got you into your current predicament, some would view this as a con rather than a pro. After knowing all the facts on debt consolidation, take time out to assess your financial habits and what got you in your position of debt. If you are intent on changing your behavior, then you understand that you are consolidating your debts at a significant cost. You should be determined not to make the same errors you did in the past so you can be debt-free down the road. The psychological effect of having only one creditor, a lower interest rate, and a potentially better credit score may be negative on an "unhealthy" debtor. The most common after-effect of debt consolidation for unhealthy debtors is that they get overly excited about the improvements. It won't be long before they acquire more debts in order to continue with their lifestyle choices that are in reality beyond their means. The more debt you incur, the more stress you experience, but more than that, you could lose everything you own. The best solution is to religiously practice budgeting and effective money management in order to avoid the need for debt solutions in the first place. In the event that you are already dealing with a lot of debt, though, take this learning experience and make sure it never happens again. For more information and tips, please visit : opiate withdrawal symptoms
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