Consumers think that because interest rates are so low right now, it might be ok to take on some extra debt to ease existing problems. A common refrain is to consolidate their debt into one nice big package that it’s easier to pay off, less expensive, and there’s only one payment after all.
Be careful of this kind of thinking.

Debt consolidation is a not the cure to eliminating debt - all it does is prolong the inevitable. It’s similar to the old saying of fighting fire with fire, but it can manifest itself in several different ways. There is debt consolidation, home equity loans or lines of credit, and zero interest rate credit cards. Interestingly, 70% of American who take out a loan or line of credit to pay off credit card debts end up with a higher debt load within just two years.

These types of statistics emphasize a major problem with consolidated debt. No matter how you look at it, the problem is that you’re only giving in to the natural leaning you had originally that got you into trouble in the first place. In reality, you are adding yet another creditor to the list and with the majority of consumers - you will end up worse for wear.

Further, if you take on more than you can handle and you need yet more access to additional funds, creditors probably won’t qualify you for the lower interest rates you are counting on. Only people with great credit scores qualify for those types of loans.

On the other hand, if you truly feel that you can discipline yourself in your spending habits, debt consolidation can be a viable risk in spite of the above. Following are some common types of debt consolidation, how it all works, and the advantages and disadvantages.

Another option is debt settlement. Managing your debt appropriately through the use of credit counselors can help you get on track and relieve your debt burden. Debt management typically costs less and takes less time than if you were to consolidate your debt. Owing $10,000 and paying $3,000 to $4,000 in interest and becoming free of debt within a few years by utilizing the help of a credit counselor can be a better option than consolidating your debt in one loan. If you took out a home equity loan for a 15 year term at 9 or 10 percent, you would end up paying roughly $9,000 in interest on top of the money you borrowed to pay off your debt.

Paying off your debt is important, but managing it successfully is the most important thing of all. If you feel like it’s just too hard to get a grip on your finances in a disciplined manner, credit counselors can help you. These are trained professionals that help you change your financial behavior. Most people that take on too much lean towards denying there is a problem; they don’t really want to know the whole number of what they owe. A professional debt counselor can help you face your obligations.

One of the first steps a credit counselor takes is to force you to stop paying for items on credit. When you consolidate your debt for settlement with creditors, the counselor will require you to give up your credit cards in order to get a better deal in payment reduction.
However, be aware there is a cost to going this route.

A disadvantage to taking this road is that your credit report will reflect your settlement. Even if your creditor agreed to accept the terms of settlement, your credit report will reflect that you are still not paying according to your original agreement. The worst thing you can do is not pay and have your credit report show that your account was charged off; with settlement, it will display that you have come to an alternative agreement.

For more information on this topic or if you are in immediate need of debt relief or debt settlement, please visit TotalDebtRelief.net