Things to consider when looking at debt consolidation
There are multiple options for those dealing with debt problems, one of which includes considering debt consolidation.
However, the Federal Trade Commission notes that consumers should keep in mind there are some dangers associated with certain types of debt consolidation. The FTC notes that some forms of debt consolidation come through taking a second mortgage or a line of credit based on the equity a person has in their home.
“If you can’t make the payments – or if your payments are late – you could lose your home,” the FTC stated.
Furthermore, people may have to pay additional fees through a debt consolidation associated with their home. Some loans may require a person pay an additional amount to what they’ve been loaned through a “points” system, where one point equals one percent of what they owe.
Still, the FTC notes that this type of debt consolidation does have certain benefits, including providing certain tax advantages.
Along with debt consolidation, there are other options consumers may consider for dealing with debt problems. For example, some may visit a credit counseling service, which can give them advice on the best way to get out of debt.