The debt consolidation industry has always been around, but it seems that it’s only recently that more and more people are starting to become aware of it.

In light of the current recession, it stands to reason that there would be more people trying to escape debt once and for all rather than suffer through it during hard times.

So, as with any industry that takes center stage, there’s a lot of misinformation about debt consolidation flying around out there. In the interest of debunking some false facts, below we’ll explain exactly how the business works.

First of all, debt consolidation is neither non-profit nor is it a form of predatory lending. What debt consolidation is, is a way for honest lenders to help debtors restore their credit and, well, simply “get on with their lives”.

With debt consolidation, you take all of your debts and lump them together into one payment plan. The debt consolidation firm pays off your old loans, and you pay the consolidation firm on the debt you owe them.

So, it’s not an overnight escape from debt, but it is a way to make your debt easier to pay off. In a way, it could be compared to borrowing some money from family to pay your rent on time. You still owe the money, but to a third party who might be a little more forgiving when it comes to interest rates and setting up a convenient payment plan.

In the 90′s, a common viewpoint had it that debt was a sign of success. As we’ve learned during a recession, there’s really nothing fun about it. Debt is something you want to avoid. There is such a thing as good debt, obviously, such as your mortgage, your car payments, but credit card debt and so forth is not so much a sign of success as it is a detriment to success. The debt consolidation business is built around eliminating debt, simple as that.

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