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debt management has become an approved solution for handling debt but could not be the advisable methode for clients to administer their debt. In a growing number of cases clients will seek out consolidation loans to eliminate their credit card debt and begin with a new slate. Although this takes care of the momentary problem it typically creates greater issues later on in life. The reasons why this happens are;.
First off, people are creatures of habit. By getting a consolidation loan you’re only masking the basic problem, your habits. Although a debt consolidation loan will satisfy your original debt it wont deal with your spending habits. Commonly individuals getting debt consolidation loans to eliminate their debt end up in twice the debt they began with.
This being the second reason debt consolidation loans do not help. After people eliminate their debts it gives them access to unsecured debt, causing the process to repeat itself again. Often times people end up with their unsecured debt at the limits again, as well as, the debt consolidation loan that they were issued to eliminate their debt. The most routine statement I hear as a financial counsellor is “I need to acquire a debt consolidation loan to repay my debt”, “I never want to use credit cards again”. In theory this is good but usually this doesn’t happen
Greg Martin
Financial Counsellor
Phoenix Credit and Debt Counsellors
Debt Consolidation Canada