Let’s not beat about the bush here! If you are reading this article, it is quite likely you are feeling the pinch of the debt you have accumulated! Whether it is Credit Card debt, the combined impact of your first, and possibly, second mortgages, etc. The good news is that you are not alone in this. Many Americans are sailing in the same boat. That means the Government is aware of this. And in turn this means, your elected representative has either worked on it or is currently trying to do something to help! No wonder, debt consolidation has become a bit more attractive now! So, if a big debt burden is bothering you, it is time you considered debt consolidation.

In your case, all of the above is true. So, you do have some options. Not very pleasant may be… but all designed to give you relief and – hopefully – to get you out of the current habit of spending your future earnings.

To benefit from these plans and programs, you need to first take stock of your situation – squarely; honestly. So, what is it that’s hurting you?

1. High interest payments? If bulk of your debt is Credit Card debts, this is very likely true.
2. High installment payments? If you have put a second mortgage on your home, this is possibly your problem.
3. Unexpected fall in income? If so, you need to know whether it is temporary or long term.

Once you do this, you are ready to consider some broad options. Your friend Bill sums up the situation saying you have four broad debt resolution or debt consolidation options:

1. a debt consolidation loan,
2. credit counseling,
3. debt negotiation/debt settlement,
4. bankruptcy, and other debt resolution options

Here we will focus on debt consolidation options and leave some forms of resolution such as bankruptcy out. So, let’s discuss the first three bullets above in greater detail.

Bill also suggests four neat steps to consider when you look at each option. These four steps on aspects of your options are considered below.

Debt consolidation loan
This option appears most attractive, especially if your primary need is to consolidate bills. However it is applicable only if you have significant equity in your home. This means your home is worth way more than the debt you owe on it. Then, if you have managed to keep a reasonably clean credit payment record, you should definitely look at a debt consolidation loan, as a very viable option. So:

1. Your monthly payments will decrease, hopefully, substantially
2. You can achieve debt freedom in a much longer period, depending on the kind of loan you raise. Your options range all the way from 3 to 30 years!
3. You decrease your total monthly cost of debt, as the principal amounts of multiple loans are consolidated.
4. Your credit score is either un-affected – or even improve at the margin as there is a certain weight given to your ability to raise a loan.

Credit counseling

Credit counseling is a service whereby a specialist will work on all your debts to reduce the total impact on your monthly payment. Typically this arrangement seeks to repay the debt 100% and focuses on getting much better interest rate for you. Normally, this works best in case of credit card consolidation. So:

1. Your monthly payments are reduced
2. You can achieve debt freedom in three to five years
3. You reduce your total cost of debt, as the interest rate is reduced
4. Your credit score is affected to a certain extent – at least during the duration of the arrangement.

Debt negotiation /Debt settlement
You would use this if your situation is quite serious. It has a pretty long term impact, but the effects are strong too. Essentially your agent works with your lenders to reduce the amount of debt you owe – sometimes by as much as 50%. So:

1. Your monthly payments are reduced
2. You can achieve debt freedom in around three years
3. You reduce your total cost of debt, as the principal itself is reduced
4. Your credit score is severely affected – though not as bad as it would be if you were to file for bankruptcy

Overall, of course, your best guide is to engage an expert to guide you. What you have above is a quick guide to use your common sense, even as the experts advise you on specifics.

Author Bio: debt consolidation consolidate bills credit card consolidation

Category: Finances
Keywords: debt consolidation, consolidate bills, credit card consolidation