The phrase that most people associate with getting out of debt is “debt consolidation”. This phase has been used over the years in different versions to mean many things to different people, but consolidating debt essentially means getting a new loan to pay out existing debts. This situation is ideal if you have great credit and can get an interest rate lower then what you are paying right now.

There are two types of consolidation loans. Unsecured loans are the first kind; they are not secured against an asset and typically have high interest rates. Secured loans (for example mortgages), is the second type and are collateral loans and usually have low interest rates.

Often the best and easiest way to consolidate your credit card debt and get a lower interest rate is to put a second mortgage on your house and pay off the debts with the proceeds of that financing. Consolidating your high interest credit card debts into a lower interest second mortgage is a smart move if you can do it.

Borrowing unsecured money in the form of a consolidation loan is a very expensive way to pay off debt, you can expect to pay much more then what you originally borrowed doing things this way. This is a dumb way to get rid of credit card debt but extremely profitable for the lender if you do not default on the new consolidation loan.

Those with bad credit can often make the colossal mistake of getting an unsecured loan at a significantly higher interest rate then what they are paying now. These types of consolidation loans can range from 28-35% interest. This type of high interest loan isn’t new, one of the more recent times in history when interest rates charged were in the 30% range was during the early 1900’s and the money was generally loaned out by Mafia loan sharks.

Run; don’t walk away from these high interest debt consolidation offers. This is usually not the best solution to resolving your debt.

You cannot borrow your way out of debt with these types of high interest consolidation loans. If you have dug yourself into a hole, you simple cannot dig your way out of it by continuing to do what you were already doing. It is almost always a path to much deeper financial troubles.

If you are not a homeowner and have a bruised credit rating then getting a consolidation loan at a lower interest rate is probably not even an option. Your bank will tell you if they can help or not and it’s a good idea to start with your account manager

If you want to avoid high interest debt consolidation, then your best bet might be a debt settlement plan. What a debt settlement company does is put together a custom plan to significantly reduce your debt before you pay it. There are no credit checks or home ownership requirements and you don’t need a co-signer to have your debt negotiated.

Provided you owe $10,000 or more in unsecured debt and have steady income, you can often get out of debt in 12-36 months for around half of what you owe and that would include the fees for the debt negotiation work.

Debt settlement plans are highly effective at eliminating debt, and should always be considered before filing for bankruptcy if your bank turns you down for a consolidation loan.

Getting out of debt is sometimes tough when you are; it requires a serious attitude towards the problem and a desire to put your family first.

Don’t be afraid of dealing with your debt problem. Sometimes bad things do happen to good people or maybe you just made some bad choices in life. We are only human. The worst mistake you can make is putting it off.

If you feel it’s time to do something about your debt, and want a free debt settlement consultation then please visit our home page and request a no obligation quote.