Being very deep in debt is not a good place to be, yet many people find themselves in exactly that situation in these economic times, frequently through no fault of their own.
When you take out a loan or a mortgage, you are not counting on the fact that you may be laid off from your job before the loan term ends, or that you will be going through a nasty divorce, or have high medical bills, or various other possibilities.
One of the unfortunate things that happens as you get further and further behind in your bills is that you start getting phone calls at home from collection agencies.
These are not usually social calls by any stretch of the imagination, but are very firm, sometimes hinging on rude, with many of the people leaving you with a mental image of the call coming from The Godfather headquarters.
Assuming your debt load is not yet at the point of considering filing bankruptcy, you do have another option, and this option has literally saved the day for many people in this unfortunate situation who were not even aware that this option existed for them.
That option is debt consolidation.
No, it is not yet another personal loan that you would tell the loan company or bank you are using for the purpose of debt consolidation.
While that might be an option, that approach is really only borrowing from Peter to pay Paul, and does very little to help you with your overburden of debt.
Instead, debt consolidation is program whereby you turn all your bills over to the debt consolidation company, and they negotiate with your creditors to lower interest rates, reduce payments, sometimes even being able to get late fees and over-limit fees waived.
But the key to remember here is that they do not pay off your loans for you.
All your loans are lumped into one package, and you make one payment to the debt consolidation company every month, and they in turn make payments to your creditors.
If you miss your payment to them, they will not make a payment to your creditors that month, which could put you in an even worse situation than you are now.
The huge advantage to you is that the sum total of your monthly payments is significantly reduced, which has the very beneficial effect of giving you some much-needed financial breathing room until you can get your ducks lined up again.
For example, if you were paying out $3000 a month on all your bills, chances are excellent that you single payment to the debt consolidation company might have that payment under $2000 or even less, and still keeping your creditors satisfied.
This also helps with your credit score, since from a credit reporting standpoint, it appears that you are making your payments on time, which is the single biggest thing you can do to raise your credit score.
And of course the additional advantage is that when you are making your payments to your creditors every month via your debt consolidation program, you will no longer be getting those harassing, annoying, embarrassing, and sometimes frightening phone calls from the collection agencies.
Consider debt consolidation and see if it's right for you.
Again, it's very much preferred over the long-term negative effects of bankruptcy, and can help you get back on the right financial track.