Many consumers have a mistaken notion of when to choose debt consolidation as a viable alternative to paying down debt themselves. Below are a few common reasons consumers choose debt consolidation: 1) Medical bills: When an emergency strikes, consumers already severely in debt have no way to financially handle the unexpected new bills. Debt consolidation enables consumers to combine their new medical bills with pre-existing credit card debt or miscellaneous other debt.
2) Loss of job: Just like the medical bills, this can be a sudden and unexpected change that alters a consumers financial stability dramatically. Debt consolidation and counseling enables the consumer to negotiate a monthly amount they can afford to pay.
3) Home and car problems: Either of these problems can cost thousands of dollars and show up completely unexpectedly. Then, when the consumer applies for a loan, the existing credit card debt is a strike against the consumer.
4) Credit card debt: This is perhaps the most troublesome type of debt consumers face. Individuals who pay the minimum amount on their debt will find that years have passed, and they have barely paid down and of the principal of the debt—they merely pay the interest on the debt each month. ■
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