How Should I Consolidate My Debt?

I have balances on three credit cards and want to know how i should consolidate is that is even an option?

Hi Lacy,

It may be necessary to consolidate if you owe a lot and are having trouble making the monthly payments. Is that the case? If you do not owe a lot and are paying the debt down, I would say you may be in good shape because you only have 3 accounts, which is not too many.

Have you looked into debt settlement or credit counseling? Or were you thinking about a consolidation loan?

I have talked to a credit counseling agency who said they may be able to lower my interest rates? Is that what these companies typically do?

What is debt settlement? I am not familiar with that consolidation option. I do not want to take out a home equity loan ever so that is not even an option.

Right now I am past due on all of my accounts, but my interest rates are all over 20% and my debt is now over $16 K since I can't make the payments anymore. Help!

Credit counseling agencies do in fact attempt to lower the interest rates with your creditors. However, if you are past due it may not be your best option since the minimum payments are clearly something you can't afford. In a debt management plan (credit counseling), you pay the agency a monthly payment which they in turn disperse to all of your creditors. So, the minimum payment to their agency is not going to be much lower than what it is now to all of your creditors.

Debt settlement, on the other hand, is the process in which a company will negotiate with your creditors in an attempt to reduce the principle amount of debt until you can afford to pay them off in one (or at times in a few) payment(s) for the negotiated amount. This "settlement" satisfies the full debt amount. Since you are only paying a percentage of the total debt amount to resolve the account, the monthly payments that clients enrolled in settlement programs must pay until the accumulate enough to settle the debt are usually much lower.

Ok great.

Does anyony have any suggestions of how I could find the best debt settlement company?

Hi Lacy- there are a few ways to track down a reputable debt settlement compnay. The first step is to do a little research online and compile a list of companies you may be interested in. The you can go to the Better Business Bureau's website (bbb.org) and take a look at the company profiles for everyone on your list. Make sure the company is a member of the BBB, and take note of the company grade (A through F) and how many complaints have been filed with the BBB for each one.

Then you may want to check out if the company is a member of The Association of Settlement Companies (TASC). Their website is tascsite.org.

If you are having any trouble or do not have the time to do your own searching, you can simply fill out a form on DestroyDebt.Com to get matched up with a qualified provider.

When someone asks, "How should I consolidate my debt?" what are the main factors they should keep in mind to come to the right answer?

Finding the best company is about understanding your problem and considering the options of a debt settlement company. You fist need to identify what they are offering and then respond to the most economic offer.

If you are wondering, "How should I consolidate my debt?" then you need to keep a few things in mind, and ask yourself the following:

1) How much is it that I owe?

2) Am I current or behind on my monthly payments?

3) How much am I able to pay monthly towards my debts?

4) Am I only paying off interest each month on my accounts?

5) Am I on the brink of filing bankruptcy?

Answering these questions is an important first step for people trying to identify how they should consolidate their debt.

Oh great i really do need help on this area. I currently hav a $25,000 mortgage payment due and I am really worried on how to take care of this. Aside from that i have $10000 due on credit card debt. Please help me figure out ways on how to fix this. thank you