Debt Management Through Consolidation

A Credit Article Contributed by Brandie King

Introduction to Debt Management Through Consolidation

If you have tried every other debt management option available to you, short of bankruptcy, and nothing has worked for you so far, then consolidation may be the way that you need to go. The main purpose of the different consolidation options is to combine all of your separate monthly payments to different creditors into one single monthly payment to one creditor.

Not only will this give you only one single payment to worry about each month, but it will also save you quite a bit as far as interest payments go. You will only be paying interest on one single account each month instead of on many separate accounts. The added benefit of using consolidation for your debt management is that, normally, your single monthly payment will be less than all of the other payments you were making combined.

Just be forewarned that you will need to change your spending habits if you decide to use debt consolidation. If you don't, then you will end up in the same situation as before you consolidated.

Debt Management Through Consolidation: Your House

You might or might not know that your house can be used as a consolidation option for your debt management. There are several different ways that you can use your house in this way. The first is that you can take out a home equity loan, which is where you use the equity you have built up in your house to pay off all of your debts. Use will use the equity to pay off your creditors then will only have the home equity loan payment to make each month.

Another way to use your house is through a home equity line of credit (HELOC). This is a similar to a revolving line of credit, but the amount available to you at any point in time will never be more than the equity you have built up in your house. The final option you have available to you with your house is to refinance it and have an additional amount included in the loan to pay off your debts.

This is different from either of the other two options because it does not have anything to do with your equity. No matter which of the three above options you choose, you will have to use your house as collateral for the loan or line of credit, which means that if you do not make your payments then you will stand the chance of losing your house.

Debt Management Through Consolidation: Low Interest Credit Card Transfers

Low interest rate credit card transfers may be a better consolidation option for your debt management. This is where you find one or more low interest rate credit cards and transfer the balances to them from your existing higher interest rate credit cards. There are quite a few cards out there that offer a 0% interest rate when you transfer balances to it. You can find out when you will start being charged an interest rate, and then transfer your balances to a different card before that time.