Debt Consolidation without a Loan

Over the last few decades, the way we use credit has changed significantly. Twenty years ago, credit card holders would have laughed at the idea of handing the drive-thru attendant their Visa card – and debit cards didn't even exist. They might even have raised an eyebrow at buying groceries with the card; but today these practices are commonplace. We buy our gas, pay our bills, and charge our meals all with a credit card, and even though some of these charges seem small, it builds up our debt even faster. When high interest rates start compounding this debt, it's time to seek debt consolidation options.

Deciding to get serious about reducing your debt is the first step toward making it happen. While you will likely hear that a home equity loan is often the most beneficial way to do this, you must make the best decision for yourself. If you feel a loan is not part of the best solution for you, there are plenty of options still available to you.

The first option is to call your creditors and negotiate new terms that can help you pay your balances off more quickly. While your creditors are under no obligation to negotiate the terms with you, they may be willing to lower your interest rate in exchange for your agreement to pay a certain amount each month. They may also require you to incur no additional debt while working to pay down your balances.

If negotiation fails, or if you need additional guidance or help in deciding how best to pay off your debt, credit or financial counseling may be the best option. You have two primary alternatives with respect to debt consolidation services: debt settlement and credit counseling. Both types of firms experience dealing with creditors and may have greater success negotiating a lower rate and payment terms that will allow you to pay more to principal. This will help you pay off your debt much more quickly.

Debt settlement is a service for consumers who want out of debt at the lowest cost, in the shortest time frame, with the lowest payment… while avoiding bankruptcy. Credit counseling, on the other hand, is a solution that lowers your interest rates slightly and can get you a lower monthly payment.

Both can negatively impact your credit, so be sure to assess your financial goals; whether that is saving the most money possible or protecting your credit score.

The counselor(s) will also advise you about budgeting and what you can do on your own to effectively pay down your debt.

Whether you do not own your home, or a home equity loan just isn't the right option for your debt consolidation needs, there are still plenty of avenues open to you. Know your options and then make the decision that's right for you whether it includes a loan or not.

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