Guide to Debt Consolidation

If you are in debt and looking for a debt relief option that will, not only provide relief, but possibly save a substantial amount of money each month, you may be considering a debt consolidation loan. While debt consolidation loans can be a smart move and help save money -- they often can cause your debt situation to go from bad to worse, so it is important to explore other debt relief options as well.

Will debt relief or consolidation help you? How much could you save?

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Typically, unsecured debts such as credit cards, store cards, medical bills, or even unsecured personal loans all qualify for debt relief -- so if you have unsecured debts, it makes sense to find out how debt relief could help you and see how much you could save. The good news is, for individuals and families who are in need of debt relief, there are a variety of debt relief options to consider -- in addition to a debt consolidation loan: These debt relief options could not only help to reduce stress, but also help you reduce interest rates, waive late fees and penalties, lower payments, or possibly help you settle debts for substantially less than you owe.

Debt consolidation loans typically involve "combining" or "consolidating" multiple high-interest debts into a single lower interest rate loan. Normally, you would think this makes a lot of sense. However, here’s where you as the consumer need to be very careful before proceeding with a debt consolidation loan. Typically, high-interest debts are "unsecured debts" – that means they are debts that are not secured by real property such as a home or car.

If you fail to pay unsecured debts, you are not putting your home or other asset at risk. However, when you take unsecured debts and "consolidate" them with a debt consolidation loan that IS secured by your home or other asset – you could be putting your home or other property at risk. In this way, you have "traded" unsecured debt for secured debt, and if you hit a rough spot financially – you may be putting yourself or your family in a precarious position. That is why is it is wise to explore all of your debt relief options before taking out a debt consolidation loan.

Compare debt relief options: Get your free debt relief analysis and savings estimate

For people who take out debt consolidation loans and have the discipline to pay off the loan on schedule and NOT accumulate a whole new set of credit card charges – debt consolidation loans can be a smart move. However, many people who use a debt consolidation loan to payoff high interest credit cards end up running up a whole new set of credit card charges. If you take out a debt consolidation loan and make this mistake, you now have a debt consolidation loan to payoff AND a new batch of credit card charges. Unfortunately, your debt consolidation loan, which was intended to help you get out of debt – has caused your situation to go from bad to worse.

Depending on your financial situation and current debts, there are a variety of debt relief alternatives to bankruptcy -- including credit counseling, debt management, debt consolidation, or even debt settlement. It only takes a few minutes online to request your free debt analysis and savings estimate.

Begin online to get your free, personal debt relief evaluation and savings estimate

The Bottom Line: Debt Relief May Be a Much Better Option than a Debt Consolidation Loan