Debt Consolidation Services

Not all debt consolidation services are created the same.  There are many different varieties of these organizations.  Some are very helpful in your pursuit to shed yourself of debt.  Others are not.  A smart consumer knows what to look for when assessing which service best suits their individual needs.

Some entities within the debt consolidation arena are lending institutions.  They seek to refinance your various credit cards and other debts into one new loan.  Many times they will seek to use the equity in your home as collateral for this consolidation loan.  If this is possible there accrues several advantages.

Home equity debt generally has lower interest rates and is tax deductible.  If you do not own your home or have sufficient equity, then there are other unsecured consolidation loans.  Many of these require good credit, however there are always exceptions to every rule.  Make sure you fully understand the terms of any loan before signing on that dotted line.

Other organizations do not seek to lend you money.  These credit counseling services offer advice and guidance regarding your family budget and controlling your debt.  They can also assist in negotiating with your creditors to lower interest rates or reduce minimum payments.  Several of the best of these services are non profit and are affiliated with religious institutions or reputable charities.

This counseling can be a crucial step to help you avoid bankruptcy.  However, other services are not so reputable.  Be wary of any organization which demands a substantial up front fee.  The goal of counseling is to reduce your debt, not add to it.  There are many good avenues to research online any organization with whom you seek to do business.