If you are struggling with debt, the very first thing you must do is stop using your credit cards. Slice them up and throw them away. Taking on more debt is not an option until you have taken care of your debt problem. Pay off the smallest debts while paying minimum payments on your bigger debt, then start putting more into the larger debts. If you are still struggling, look for help through debt consolidation.
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 a home equity loan is not possible for you, there are debt consolidation companies that offer other ways of consolidating and settling debt. Companies with good reputations are often able to mediate between you and your creditors. By doing so, they may get interest rates lowered and even be able to help you settle for less than you owe. The rest of the debt is then lumped into one by either an unsecured loan or an offer to distribute payments for you. The interest is usually lowered and the payment is lower than you were paying when dealing with them all on your own. They do charge a fee for their services and it is added to your monthly payment.
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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