When dealing with a lot of debt, debt consolidation can be an excellent solution. It allows you to condense your various types of debt with a bigger loan, reducing the amount of interest and number of bills to be paid. However, in the current economic climate, finding lower interest rates can be a challenge, and the collateral some lenders require can make the loan not worth it.
So what options are there? Obviously, it is always possible to take out a loan to cover all of your debts, and pay off that loan gradually. Using a credit card for this purpose is one possibility if you are going to attempt this option, generally if you’re trying to consolidate payments for multiple credit cards. This form of consolidation can be very convenient, but it is important to know that you can pay off your debt in the introductory interest period. If not, you can end up paying more money than you would have, and run up even more debts. Home equity loans provide a similar option, frequently with good interest rates. However, as with using a credit card to consolidate debt, be certain that you can make your payments. In this case, you risk foreclosure in addition to continued debt.1
But you also don’t have to coordinate your debt on your own. Another option is a debt-management plan, in conjunction with the assistance of a credit counselor. Your credit counselor helps you to consolidate your debt and reduce your interest rates by negotiating for you. There are a number of organizations which offer recommendations or advice on credit counselors and agencies.2 The Association of Independent Consumer Credit Counseling Agencies (aiccca.org) and the National Foundation for Credit Counseling (nfcc.org) are both excellent examples of credit counseling agencies.
And finally, as a last resort, declaring Chapter 13 bankruptcy is also a possibility. Doing so will have a very serious impact on your credit history, and should only be considered after you have ruled out all other means of dealing with your debts.3
References:
1Anderson, Max. “Understanding Your Debt Consolidation Options.” http://www.consumertipsreports.org/understanding_your_debt_consolidation_options.html
2Ataiyero, Kayce T. “Combining debt can be useful, but risks abound.” Chicago Tribune. 28 Aug 2009. 31. eLibrary. <http://elibrary.bigchalk.com>.
3Anderson, Max. “Understanding Your Debt Consolidation Options.”
Jessica attended high school at Ravenscroft School in Raleigh. She participated in swimming, cross country, and track and field. In track, she was Conference champion her junior and senior years in the 100 meter hurdles. In school, her favorite topics were History and English, and in the summer after her junior year, she studied abroad at Cambridge University in England, majoring in European History and English Literature. That summer, she also attended the Tar Heel Girls’ State educational program, and completed the course that enabled her to become a lifeguard.
Throughout high school, Jessica had worked as a swim instructor for the A. E. Finley YMCA in Raleigh, but during her senior year she began to also work as a lifeguard. At the beginning of the year, her article on the development of the Gothic architectural style in France was published in the Concord Review, a national history periodical. In the spring, she made her decision to attend the University of North Carolina at Chapel Hill the following year. Later in the spring, she worked as a research assistant to Professor Michael McElreath of Meredith College. She researched and offered recommendations on potential reading assignments and textbooks for a future course on American Intellectual History.
The summer before beginning college, Jessica worked again as a swim instructor and lifeguard for the YMCA. She began school at UNC Chapel Hill in the fall of 2008. In the spring of 2009, she began work on an article about the changing social and economic roles of women in Mali, a sub-Saharan African nation.The following summer, she completed work on her article while again lifeguarding for the YMCA.
She is now nineteen and a sophomore at UNC Chapel Hill, hoping to major in History with a concentration in non-Western civilizations and a possible minor in Women’s Studies. She enjoys reading, writing, playing the piano, researching, and drawing, and hopes one day to become a professor.
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