Debt Management Programs

Debt Management programs

Some people are so overwhelmed by their debt that getting all of it paid off isn't really possible without some help. If that's you, you still have a couple of options.

Using the equity in your home to pay off unsecured loans including credit card balances is one of the primary reasons home owners look for home equity financing. Because the loan is a mortgage it usually has a lower interest rate and a longer repayment period than a personal loan.

Debt settlement is using some of your cash and getting your creditors to agree to take the lesser amount as payment in full. That will hurt your credit rating and there may be some income tax consequences but the debt and the monthly debt payment will be gone.

Credit counseling is a possibility. The counseling service will set up a reasonable, although tight, budget and use every extra dime to go towards debt payment. They'll negotiate with each creditor to adjust the interest rate, waive late fees, and sometimes decrease the amount owed.

Consolidation loans are another option. In most cases you'll use the equity in your home to secure the consolidation loan. Each of your creditors will be paid and you'll have a fresh start.

In most cases the consolidation loan will be secured against your home. since mortgage loans have a lower interest rate than unsecured debt and the loan has a longer term your payments will most likely be lower than what you were paying before. However, if you default on the consolidation loan you could lose your house.

No matter what you do, at least do something. That credit card debt won't go away by itself. Find a debt management program and stick with it.