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Let’s look at the situation of the average adult American - he/she would have a car loan definitely, a house mortgage, a huge credit card bill and maybe or maybe not a consumer loan as well. Some reports say that every fourth US citizen would be on the brink of bankruptcy, owing to their own liberal style of spending and undisciplined financial management.

Most people are happy to apply for the debt consolidation loan as an SOS measure - and many come off the debt problem with flying colors. The debt consolidation loan is one used to pay off all the debts and get the installment concentrated into a single monthly payment. Generally speaking, a debt or bill consolidation loan offers you a second lease of life, which is simply great.

However, before we go any further, let us see what are the pros and cons of such a loan. Let us see whether it is really as great as its reputation has it to be.

The Advantages Of A Bill Consolidation Loan

1. One monthly payment - where you had to pay a minimum of 10-15 creditors on different deadlines and different pay forms, the repayment of your debts is reduced to only one payment, which definitely would reduce the financial and mental stress for you.

2. Reduced monthly payment - the bill consolidation agency would take on to pay all your outstanding and charge you a much smaller monthly installment, when compared to the total you were initially paying your debtors. They also negotiate lower interest rates and waivers for late fees and penalties. In this way, you are left with sufficient cash to take care of your needs.

3. One point repayment - where you had to pay 10-15 creditors, now you have only one to worry about. The simplification does indeed make your life more trouble-free, not to mention stress-free.

4. Tax write off - the payment that goes for repayment of credit card bills is just expenses. However, the money repaid through the debt consolidation as interest on mortgage, would be considered for tax write-offs.

The Disadvantages Of A Bill Consolidation Loan

1. Temptation to go further into debt - the debt consolidation loan would release the most of the pressure that was keeping you down financially. Once this loan takes care of your debt repayment, you might be tempted to get back on the splurging habit and rake up some more debt.

2. High risk - the consolidation loan are usually secured loans, i.e. they will need collateral. Hence, if you miss on payments here, you might end up loosing the collateral you have attached to it

3. Longer to repay - since most consolidation loans are against mortgages, you would end up repaying the loan over period of 10-30 years - this is indeed a lifetime.

4. Spend more - even if the interest is lowered and the monthly installment is reduced (within your means), you will end up paying more over the whole period of loan.

Therefore, the best advice would be to use the debt consolidation loan with great caution - and only as a last resort.

If you’re considering a consolidate bills loan to relieve your financial stress and mounting bills, then make sure to visit http://il-credit-consolidation.com , a popular debt relief site that provides credit repair tips, credit counseling advice and free debt consolidation advice.

Article Author :Robin_Boddy

Tags: debt consolidation loan, free debt, tax, Debt Relief, Debt Consolidation

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Tags: Bankruptcy, Debt Consolidation, debt consolidation loan, Debt Relief, debt repayment, debts, free debt, Loans, repayment, tax