You have opted for the right choice after months of stress due to an increased credit card statements and a constant streak of collection calls and letters. It could seem like a great relief to lump all the money that you owe into one debt by consolidating your debt. yorkcreditservices.com highlighted here three common mistakes in debt consolidation to avoid:
How you get into debt is not well understood
You are repeating the same mistakes in the future, even though you get out of debt if you fail to comprehend and benefit from the way you first got into it. The consolidation of debt may be a Band-Aid remedy because you merely pay one month and keep on trucking on your expenses. You could never change your habits in this case where you may not look closely at how you ended up with a pile of debt that you could not afford.
Not taking into account all options for consolidation
To consolidate your loans, there is not only a single one-size-fits-all way. You can select from several debt consolidation Toronto alternatives. These could include the conversion of all your credit card debts to one card, placing them on a line of credit, or applying for a safe or unsecured loan with a lender.
Since so many folks are struggling with debt, there are other lesser-known options for debt assistance are available, which do not involve applying for more loans. This includes a debt consolidation program, a debt settlement solution into one affordable monthly payment on all the unsecured debts. It also includes a Consumer Proposal that consolidates and reduces your debt.
Are not changing the way to use credit
If the consolidation of the debt is not completed correctly, it can backfire. Let’s take the example of credit card consolidation. You free up thousands of dollars in your pocket when you stock all of your credit card debt into a single card or another loan. If you’re a spender, you may turn again to your cards, resulting in the dilemma starts again.
It would be wise to limit your access to credit cards and your temptation to spend if you would turn a new leaf over. You will convert your credit line into “deposit only” status if you tend to use the line of credit in place of your chequing account. It can allow you to make a payment but you can’t spend the money.