Bill Consolidation Advice to Help With Debt If you choose bill consolidation as a solution to excessive debt, here are some helpful strategies to implement.   When Debt Becomes Excessive   It is easy to become overburdened with debt. When an individual has a relatively good history of paying bills on time, credit card companies are quick to offer credit limit increases or new credit cards at enticing initial interest rates. Consumers are quick to take companies up on these offers, promising themselves that they will not use the credit except in cases of emergencies. Without a budget and self-discipline, however, it is easy to pull out the plastic and engage in impulsive spending simply because the credit is available. Eventually, the monthly payments become overwhelming, and the debtor sees no way out of the financial strain. Bill consolidation can become an effective solution if the process is implemented correctly and debtor is willing to change future spending behaviors.   How It Works The process of consolidation involves combining most or all of one’s unsecured debt into one larger loan with a monthly payment smaller than the combined payments of the original debts. Occasionally, secured debt, like a car loan, may be included as well, but generally mortgage loans are not included. The idea is to lower the total monthly debt obligation, so that the debtor can meet his obligations and expenses without stress.  An individual may secure a bill consolidation loan himself if his credit is still good and he is able to negotiate a decent interest rate on the new loan. If credit has already been damaged, however, it may be necessary to use the services of a consolidation specialist who is experienced in negotiation with debtors to lower total payoff amounts and in securing a consolidation loan. There are fees involved and the interest rate may be quite high, however, lowering the monthly obligation is preferable to debt going into collection or, worse, a bankruptcy. Important Considerations in Bill Consolidation   There are several things to consider in the process of consolidating one’s bills:   If one decides to use a professional, it is critical to do some research and secure an individual/company that has a solid reputation and references. Non-profit bill consolidation organizations are often for-profit, so do not be fooled. Carefully check the fees being charged you as well as the interest rate on the new loan they may be securing for you.  If you own a home and you have equity in it, consider a home equity loan or a complete re-finance of your mortgage. In this way, you can get the cash needed to payoff debt, and the interest rate will be lower than a personal or conventional debt consolidation loan. If your credit has already been affected negatively by late or missed payments, this may not be an option for you, and there are also fees in a mortgage re-finance.  If you or a specialist has negotiated lower payoff amounts to creditors, understand that this will be reflected on your credit report and will lower your score in the short-term. Commit to cutting up your credit cards (it is usually recommended you keep one for emergencies only) and to no new debt until the consolidation loan is paid in full. Whenever possible, pay as much on the debt consolidation loan as possible. This will lower overall cost of the loan, and you will complete the obligation sooner.