Debt consolidation is often looked at as a means to get out of debt, and possibly even saving money. Bad debts often push people into making hurried decisions without seriously considering other options – or the real cost of the option they have chosen.
Choosing debt consolidation, while it may appear to be a worthwhile solution to consolidate bills, may simply be a way for the debt consolidators to look good and take money from you. Oftentimes, they only take the money from you each month and do little else.
According to an article at SmartMoney, Deanne Loonin, who is a staff attorney working with the National Consumer Law Center (NCLC) and who has investigated the practices of debt-settlement companies, says "Once you sign up with a company, chances are you'll pay dearly for its services."
The cost may end up being 15 to 18% of the amount of money saved in the debt consolidation. It may be, however, as much as 25%, which is not too uncommon. When you realize that debt consolidation really does not offer you anything you cannot do for yourself, you have to ask yourself if it really is the reasonable thing to do.