Credit Crunch: Debt Consolidation Help
Plan B: Consolidating your debts into one loan.
That's pretty self-explanatory, but debt consolidation means rolling many (higher interest) debts into one (lower interest) debt that'ss easier for you to pay off. There are a number of ways to accomplish consolidation based on your personal situation and financial resources. (It’s easier if you still have a good credit score and aren’t already behind.)
When it comes to consolidation, you do not need "help".
Here's a warning: There are a lot of companies who advertise "credit counseling" or "debt counseling" services and pretend to offer to help you with consolidation. The reason they call it a "service" is because they charge a fee. What most of those companies (including the non-profit services, many of which are really run by banks) actually do is collect as much information about you as they can, turn that information over to a credit reporting company (which will ruin your chances at getting a real consolidation loan), and then put you on what they call a "payment plan". What this means is that instead of writing several checks each month to all of your different creditors, you'll write one big check each month to the credit counseling firm, and they will, first, take their fee out of your check - and then pass the rest of your money along to your various creditors. Their "plan" is for you to pay them. You could have done all of this, for free, and your credit report and score wouldn't be ruined by "help".
The difference between "help" and debt consolidation.
We encourage debt consolidation because it is most often the best option for the average individual who owes several different debts (to several different creditors) at several different interest rates. When it comes to weighing pros and cons, consolidation typically has fewer cons than other options, but if you're already late on a number of loan payments (and your credit score is already low) or if the math simply doesn't work (you have no income, but tons of debt), then the chance of any financial institution making you a loan for debt consolidation (at a better, lower interest rate) is low. Consolidation loans are best when the math works...