Debt Consolidation When a Loan is Hard to Come By |
By Jessica Malitoris on December 7, 2010
.jpg.aspx) Debt consolidation on the most basic level involves paying off debts at once, creating another, larger debt while compressing and decreasing monthly interest payments. Debt consolidation most commonly takes the form of a loan, used to cover all outstanding debts and reducing the amount paid in interest by creating only one interest rate. Having only one monthly payment is much easier to manage. Unfortunately, in the present economy, it is often harder to come by lower interest rates, and in some cases lenders will require collateral, often making the larger loan not worth the effort.
Sometimes, rather than consolidating with a loan, individuals will charge all their debts to a single credit card that has a lower interest rate, and make those payments gradually as well. However, as with loans, there can be problems. Often, consumers will run up more debts with paid-off credit cards, thereby creating more debt for themselves and beginning the cycle again.
Fortunately, a less risky option exists: a debt-management plan, in conjunction with the assistance of a credit counselor. The plan lets you consolidate your debt and reduce your interest rates through the help and negotiations of your credit counselor. There are a number of organizations which offer recommendations or advice on credit counselors and agencies.
Among these is the Association of Independent Consumer Credit Counseling Agencies (AICCCA), whose mission is to help consumers find quality, consistent credit counseling and debt management services. The Association’s website (aiccca.org) is easy to use and to read, and it even provides a list of the organization’s standards and code of practice.
Another excellent resource is the National Foundation for Credit Counseling (NFCC), which promotes responsibility in personal finances and seeks to educate consumers. The Foundation’s website (nfcc.org) is equally understandable and incorporates a number of brief answers to common financial questions, in addition to offering educational services and counseling. It is itself a credit counseling trade association, and offers counseling resources via the internet or telephone through partner agencies.
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