Consolidating Your Debt

Options for Consolidating Your Debt

Debt consolidation is a popular topic especially in economic hard times like these. Debt consolidation is basically taking all of your bills and placing them under one umbrella. Debt consolidation can help lower monthly payments. Although there are also negatives such as loan fees. Now that I have told you what consolidating your debt is and a few pros and cons, I will show you multiple options. After you view these options you can decide whether this is for you or not. Consolidating your debt isn't for everyone.

One of the most popular forms of debt consolidation is home equity loans. This option isn't for everyone. There are positives aspects such as reasonable interest rates. But obviously the biggest negative aspect is the fact that you have a lien againts your own home. This puts your home at the risk of foreclosure.

Credit counselors is another way for you to try consolidating your debt. Credit couselors are basically the middleman (mediator) between you and credit card company. Credit counseling services will contact your credit card company and intervene for you. You will have to pay the credit counseling service a monthly fee for this though.

The third option involves taking multiple balances and transferring them to a single low-interest card. This is a very popular option. So far this option sounds great, but sadly there is a negative aspect of it. The so called low-interest card is only low-interest for so long. Later on the rates increase and can cost you more in the long run.

If you decided the debt consolidation options listed above aren't for you, than you can try debt settlemt. Debt settlement is similar to credit counseling services without the middleman. You talk directly to the creditor. Both of you will benefit, you wont have to file bankruptcy and the creditor will receive more this way too.

And of course this is a last resort, but there is always bankruptcy. This obviously has the most negative long term consequences. Obviously your credit score will have a huge negative long term impact. I myself would definitely recommend studying and learning about all the options listed above before considering filing for bankruptcy.

My favorite option listed above is the credit couseling service. You will have a monthly fee, but in my opinion it is better than putting your house on the line or bankcruptcy. Also it feels nice to know you have a mediator working directly with the credit card company on your behalf. But its up to you and not one option is right for everyone. Remember to always do your research before making a major decision like this.