The first thing you need to do if you are under a mountain of debt and are not able to make timely payments that do more than cover interest is cut up all your credit cards. Do not take on more debt until the debt you have is paid. Address what you can fix on your own and then look for help. Debt consolidation may be the answer you need for getting out from under high interest and multiple bills.
Debt consolidation is an umbrella term, meaning there are a few different ways it can be done. Do some exploring to find the right option for your circumstances. For those who have equity in a home, a low interest loan based on that equity could be the answer.
If you do not have home equity, some debt consolidation companies may still be able to help you. Find a service that offers to talk to your creditors about lowering interest rates and settling some debt with less than you do owe. They will then combine the rest of your debt and charge you one payment a month with an additional fee for their service. Sometimes they do this through an unsecured loan. Other times, they take your one payment and pay each of your creditors for you.
Don't pick a debt consolidation company too quickly. Look into the backgrounds of several of them by checking with consumer agencies such as the Better Business Bureau and by talking to people who have used the companies you are considering. When you find one that looks reputable, call them and ask for details on how they work and exactly what they charge. A company that offers debt counseling is your best option. These services are invaluable when it comes to getting out of debt fast and staying out from under debt for the rest of your life.
The last alternative to mounding debt is bankruptcy. Because of what this does to your credit report, you should exhaust every other option before going that route. If you cannot do it on your own, an honest debt consolidation firm may be able to help you avoid the consequences of bankruptcy.
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