Credit Debt Consolidation Counseling

Debt consolidation isn't the best debt relief option for everyone, so it may be helpful to work with a credit counselor to fully understand all the options available for your specific circumstance. You must be committed to paying off your debt when you take on a consolidation loan. By making the right choice in your debt payment strategy, you will avoid falling further into debt and regain control of your finances.

Credit Counseling

Those who are struggling to make payments on their debt each month or have trouble coming up with a reasonable budget may consider using a credit counseling company. The National Foundation for Credit Counseling website is an excellent resource for finding reputable credit counseling organizations across the country. Your counselor will help you to create a budget, as well as examine your specific financial situation to propose solutions. Such options may include debt consolidation, debt management plans, self-help plans or even bankruptcy, depending on the extent of your debt. A credit counselor will be able to help you consider all of your options carefully and help you decide if debt consolidation is the right one for you.

Debt Consolidation

Debt consolidation is one option for tackling your debt, and it involves gathering multiple debts under one loan so that you only make one monthly payment. Many companies and banks advertise debt consolidation loans at rock bottom rates to encourage people to think that they will pay less on their overall debt with a consolidation loan; however, those rates generally apply only to those with very high credit scores. Therefore, it's important to make sure that you truly are getting a better deal by consolidating by checking your current interest rates against the loan you qualify for.

Warnings

Debt consolidation may not be the right option if you have problems with overspending. When you take on a debt consolidation loan, your previous balances are wiped out and nothing is stopping you from spending on them again. Therefore, you must be dedicated to paying down the consolidation loan and leaving your paid accounts alone. A credit consolidation counselor will help you to budget the payments into your financial plan so that you have an easier time staying on track.

Considerations

For those who do have trouble with overspending, a safer route to paying off debt may be to negotiate lower interest rates with creditors and then create a payment plan on the existing accounts. Bypassing debt consolidation means avoiding the temptation of spending on the credit that becomes freed by the loan. Lowering your credit card interest rates may be as simple as calling your creditors and requesting a reduction in your current rates. If they don't agree, call back another day and ask a different representative. By lowering your interest rates, you end up saving money on your overall debt, which means you can pay off your debt faster.