There are a few widely believed myths about debt consolidation finance:

1. With bad credit I can’t get a consolidation loan - This just isn’t true. However, with bad credit, the lender will probably want to see the loan secured by an asset like your home or a vehicle. If you have enough equity in your home you should be able to get a home equity loan or refinance and get cash back. You can use this equity to pay off debts. If you have a car with equity, you should be able to refinance the car and get cash back.

2. It’s smart to consolidate ALL my debts into one loan - Most of the time, even if you are approved, it’s not wise to consolidate all debts into one loan. For example, student loans usually have much lower interest rates and much better terms than other kinds of debt. Those are usually best kept separate from the rest of your loans. If you owe a tax debt, sometimes the IRS can set you up on payment plans that are lower interest than a high interest consolidation loan. Although its nice to think of having all debts in one location, it won’t always save you money.

3. Debt consolidation will save me money - Debt consolidation will only save you money if you have an overall lower interest rate and payment plan that enables you to pay off the debt faster. Its good to consult a finance expert to help you run the numbers and make sure your plan is financially sound.