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The fact is a debt consolidation loan may actually cost you more money. Here's an example of what we mean. If a lender was to tell you that it could get you financed with no out-of-pocket costs, what it probably means is that it’s simply rolling those costs into the loan, where you will end up paying interest on them. Plus, if you get out a calculator and do the math you'll see that most debt consolidation loans will cost you a lot more over the long run vs. simply paying off the debts yourself. This is because they typically have much longer terms.
Your life would be ruined by a bankruptcy
If a credit counselor suggests that your life would be ruined by a bankruptcy, you should probably avoid that person. Yes, bankruptcy will definitely have a negative effect on your credit score and credit report. In fact, most financial experts believe that a bankruptcy would reduce your credit score by 200 points. This could drop you from having a "good" credit score to a "poor" or even "bad" credit score. In turn, this would make it very difficult for you to get any new credit for at least two to three years. However, you may be able to get some credit though it will come with a fairly high interest rate. If you work on repairing your credit with debt consolidation, you could be almost back to normal in three to four years.
It's also a fact that a bankruptcy will stay in your credit report for either seven or 10 years, depending on the credit-reporting bureau. But this is a case where having the stain of a bankruptcy in your credit report could be better than going without food or becoming homeless.