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Financial counselling has become a accepted solution for handling debt but might not be the appropriate methode for individuals to handle their debt. In a lot of cases people will look for consolidation loans to eliminate their unsecured debt and start with a new slate. Although this takes care of the initial problem it regularly creates bigger problems later on in life. The reasons why this happens are;.
First of all, people are creatures of habit. By getting a consolidation loan you are only avoiding the ultimate problem, your habits. Although a consolidation loan will pay back your initial debt it wont deal with your spending habits. Commonly People getting consolidation loans to eliminate their debt end up with twice the debt they started with.
This is the second reason consolidation loans do not pan out. Once individuals eliminate their debts it gives them access to available debt, allowing the process to repeat itself again. Usually people wind up with their un-secured debt at the limits again, as well as, the consolidation loan that they borrowed to eliminate their debt. The most typical comment I hear as a debt manager is “I need to acquire a consolidation loan to pay off my accounts”, “I don’t want to use credit cards again”. In theory this is superb but often times doesn’t happen
Greg Martin
Financial Counsellor
Phoenix Credit and Debt Counsellors
Debt Consolidation Canada