There’s more to it than just making the monthly payments.

Are you someone who’s scared to look at your checkbook balance and open your credit card statements? If there’s a long trail of unread mails in your inbox from the credit card companies and you know that you’ve accrued hefty interest charges and fees, you might be the best candidate for combining your debts into a single monthly payment through a loan.With the pitch of lower monthly payments and revised interest rates, debt consolidation often seems to be an attractive option but if you think that it only deals with making single monthly payments to the lender, you’re grossly mistaken. If a debtor takes this kind of approach towards debt repayment, he will do nothing but delay the inevitable. Check out some debt consolidation facts that you should educate yourself on before taking the plunge.

• Debt consolidation is a loan to repay other loans: No, if you think that you’ve got an option for enjoying a free lunch, you’re probably nurturing the wrong notion. This is a master loan that you take out in order to repay all your other loans and it’s not at all a simple fix. You can certainly eliminate a couple of bills, merge them into a single payment but you can’t change the fact that you still owe money to your creditors and lenders. Although you can immediately use the proceeds of the new loan to pay back your old ones, you will still have to repay the new loan.

• Debt consolidation isn’t the best option for all debtors: Debt consolidation works best for those debtors who execute a plan of managing their finances along with consolidating their debts through a debt consolidation loan. If you’re someone who doesn’t follow the basic personal finance tips like saving money, following a budget and curtailing the usage of credit cards, you won’t ever be able to successfully complete the debt consolidation process.

• Secured debt consolidation loan could lose your home: There are some people who look forward to using their home equity as a route towards consolidating their debts. If you actually take out a home equity loan in order to combine your debts, delinquencies or missed payments might lead to a forced foreclosure of your home. Therefore, you should remain careful about the monthly repayments if you bundle up your debts through a secured loan so as to avoid losing your homeownership rights.

• Debt consolidation doesn’t reduce your debt: Unlike debt settlement, debt consolidation doesn’t reduce your payments. It changes the ownership of your debt accounts and from owing multiple creditors, you owe a single lending company. There are many people who simply believe in the myths that say that debt consolidation helps you eliminate a portion of your debts. But it is not the fact.

So, before you take the plunge into the debt consolidation bandwagon, you should take into account the above mentioned facts. Try your best to manage your finances and lead a financially disciplined life so that you can combine your debts into a single monthly payment with ease and secure your financial future.