Getting Debt Help: Five Steps Toward Debt Consolidation

Debt stress can negatively impact every aspect of your life. The only way to cure debt stress is to get rid of it by consolidating and managing debt with a goal of eliminating it. Here are five tips for starting a debt consolidation plan:

• Understand How Credit Card Debt Consolidation Works: Debt consolidation involves rolling several debt accounts into one. You can accomplish this by borrowing enough to pay off all of your credit card accounts, but tightening credit restrictions are making this increasingly difficult. You may qualify for enough to pay off your debts by putting up your car or home as collateral, keeping in mind that debt consolidation lenders can repossess your car or foreclose on your home if you don't repay them. A safer way to consolidate debts is getting debt help from a professional credit counseling service. Before seeking debt help, you'll need to gather some information.
• Know What You Owe (and to Whom, and What It's Costing): This step may temporarily increase debt stress, but it's worth for achieving credit card debt consolidation. You'll need to review all of your credit card accounts and list how much you owe, who you owe, and the annual percentage rates (APRs) and minimum payments for each account. The APR for each account appears on each billing statement.
• Choosing a Credit Card Debt Consolidation Option: You'll need to decide if you can develop and commit to your own debt conslidation plan, or if you need help. Seeking professional debt help can help you stay on track, and provides an interface between you and your creditors.
• Cooperation and Cutting Up Cards: If you seek help from a professional debt consolidation program, your counselor will review your income and debts and negotiate a repayment plan with creditors. You make payments to your debt consolidation agency, and they disburse funds to creditors. The downside is that your plan can be voided if you fail to meet written terms, and you may be required to close your credit card accounts.
• DIY Credit Card Debt Consolidation Methods: If you're making your own debt consolidation plan, you can approach it in a way that works best for you. Sometimes it's easiest (and psychologically satisfying) to pay off any small debts first for reducing the number of bills you have and streamlining debt management. Financial advisers often recommend paying your bills in the order of highest APR to lowest. You would pay more toward the highest APR debt until it's paid off. Then you would pay that amount plus your minimum payment on the next highest APR debt and so on. This method is sometimes called the avalanche method, as it gains momentum as debts are paid off and more is paid toward each remaining debt.

Get started today toward regaining financial security. The one debt management plan you cannot afford to use is the ostrich method, which requires burying your head in the sand and doing nothing.

About the Author:
Karen Lawson started writing stories about birds and surfing at an early age. For more than ten years, she enjoyed a productive corporate career in mortgage banking before moving to Reno, Nevada in 1997. Karen earned BA and MA degrees in English (specializing in writing) at the University of Nevada. Significant areas of research and writing include truth and ethics in creative nonfiction, medical humanities, and the symbolism and lore of birds in American literature and culture. Karen has taught English at a community college, is writing a collection of poetry, and enjoys birdwatching and walking her basset hounds.