People who apply for a debt consolidation loan are either already financially stressed or in danger of going that way.
And too many mistakenly expect debt consolidation to be a panacea for all their ills – when it’s more like putting a plaster on a serious wound. While that is true, it’s also true that there are savvy ways to deal with debt.
On the other hand, credit cards, store cards and short-term loans incur interest of anything from 21 percent a year to 32 percent over six months.
For this reason, many people use their home loans to finance big-ticket items such as appliances or furniture, making sure they don’t stretch the repayments for such depreciating assets over the term of their bond.
(To find out more about the automatic stay and what happens if a creditor violates it, see our Bankruptcy's Automatic Stay topic area.) In addition, the payday lender may accuse you of writing a bad check and threaten to press criminal charges.