Finding a Debt Consolidation Solution to Fit Your Needs

By: Darnell Scott

When you look around at your finances and decide what the right debt consolidation solution is for you it must be tailored to your needs. Maybe your cousin, who has equity in his home, decided that it was best for him to take a home equity loan in order to, consolidate his debt. But even if you have equity in your home, that may not be the best solution for you. You have to look at your own personal situation and decide what is best for you.

Various programs exist for debt consolidation, and they are individualized to the needs of each person. For the person who just needs to get rid of some credit card debt, debt management programs may work best for you with a reduction in interest rates to help alleviate some of the interest and allow you to pay the bills off earlier. Or maybe your circumstances may only warrant debt counseling, especially if all you need is a way to learn to budget your money and get your credit card payments under control.

Of course, if you have a problem with too many credit cards and high interest rates, you may want to consider a consolidation loan through the bank if your credit can substantiate it and you have collateral to back it. If you are able to proceed that way, you'll reduce your interest rate and payments, however, you will also have to condition yourself not to go right back and run up the credit card bills all over again.

Debt counseling may work if your bills are not completely out of control, but you have been unable to adjust yourself to living within a budget so that you can not only pay the payments, but attempt to pay off your debt. You have to be careful, though, that the company you choose knows exactly what you want to do and doesn't try to talk you into other services that you don't need.

Of course, if you've gotten out of control, debt management may be your only solution, but you do want to be sure that you don't get pulled into a company who is going to try to convince you to make a settlement instead of paying off your bills in full. This type of company will hold onto your money until the creditors really get upset, then release the money under the contingency of accepting just pennies on the dollar in repayment. This program can cripple your credit record, and if you have had to proceed to that level, you may as well file bankruptcy and have some of the debt expunged.

Tread carefully and know with whom you are dealing. Check the Better Business Bureau for any complaints, and be sure to read all of the fine print in the information that is provided. Do not allow them to pull you into a program that is not what you need or want. Be wary of those who try to sell you an interest rate that is lower that one you have been quoted by your bank based on your credit history.

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