Available Debt Consolidation Programs

"Debt consolidation" can mean a lot of different things. Perhaps you have average or above-average credit, but you want to consolidate several of your debts into one, lower monthly payment. Maybe interest rates have come down since you borrowed from several creditors, or perhaps years of making faithful payments has improved your credit score, thereby qualifying you for lower interest rates.

If the above describes your situation, then you have plenty of debt consolidation options - especially if you have home equity. But the fact of the matter is that most people begin searching for debt consolidation loans when they need debt relief. People with strained credit, minimal savings, and high amounts of debt have fewer debt consolidation options, but that's not to say that they can't be helped.

Debt Consolidation Loans

If you have several unsecured debts with varying interest rates, you might be able to take out a debt consolidation loan, which can be used specifically to pay off your existing debts. If you have decent (or better) credit, your debt consolidation loan may come with a lower interest rate - particularly if your debt consolidation loan can be secured by a physical asset, such a your home equity. Alternatively, you could use your debt consolidation loan to stretch out the duration of your debt, thereby reducing your monthly payments. For example, if you had three loans with varying maturities of two years, five years, and seven years; a debt consolidation loan to be paid back over the course of ten years could save you money on your monthly payments even if its interest rate was higher than all three of your existing loans.

It is important to note that if you stretch out your payments and increase your interest rates, you are actually adding on debt. Do not mistake a debt consolidation loan to be a form of debt reduction - but it can be a form of debt relief. Lower monthly payments can give you the breathing room you need to rebuild your financial life, but it will all be for naught if you pile on even more debt in the meantime. Be sure to carefully examine the closing costs, interest rates, and terms of all loans, and to understand how consolidating fits in to your long-term financial plans. Consider enrolling in a credit counseling class or visiting a financial planner to help you develop an effective strategy.

Debt Management Plans

If you're unable to find a debt consolidation loan and you are in desperate need of help, a debt management plan could be your best option. These are plans entered into between debtors and creditors, usually with the help of a credit counselor, that consolidate debts and lower interest rates for troubled borrowers. It is important to note, however, that debt management plans can damage your credit standing, and you are normally not allowed to take on any new credit while you are involved in a debt management plan. If you have the means to do so, regular debt consolidation loans are preferable, but the reality is that most people in search of debt consolidation are best served by entering into debt management plans.

Debt Relief USA is your one-stop source for personal finance information. You can find out much more about credit counseling, debt management plans, and debt consolidation loans by exploring our website. Good luck!

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