Debt consolidation is a viable option for many individuals struggling with their debt. Debt consolidation combines all of your debt into one place, creating a single interest rate for all of your debt. Debt consolidation has many benefits. For example, debt consolidation will stop the harassing phone calls and letters that you may be receiving from your creditors.  In addition, debt consolidation may help you save money by erasing late fees or other expenses, if your debt consolidation counselor can negotiate such changes. There are several ways to accomplish debt consolidation.
 
First, contact a non-profit agency to assist you with your debt consolidation. Many states require non-profit credit counseling agencies to be registered prior to assisting consumers, so check with your state regarding the licensing requirements. A credit counselor will have several ideas regarding how to accomplish your debt consolidation depending on your particular situation. For example, a credit counselor may recommend transferring debts to a zero interest credit card, using the cash out refinance option on your home, or applying for a second mortgage on your property to repay your debt. A credit counselor should sit down with you in person and review your financial information. Be wary of companies that do not want to meet in person or charge a large fee just for an in person consultation.
 
Consider transferring your debt to a zero interest credit card. If you have a lot of debt on several credit cards, this can be a good option to consolidate your debt on a zero to low interest card. However, depending on your situation, it may be difficult for you to qualify for a low interest card, especially if you have bad credit. Or, you may only be able to move debt from your high interest cards to a low interest credit card, thus not consolidating all of your debt. In addition, the new credit card may charge you a balance transfer fee and only provide the low interest rate for a specific period of time, like one year. However, if you are able to repay your debt within that time, this may be a good debt consolidation option for you.
 
In addition, if you own a home and have significant equity in the home, you can do a cash out refinance or apply for a second mortgage. In a cash out refinance you refinance your home and take out a portion of your home’s equity to use to repay your debt. In addition, you may want to consider taking out a second mortgage to assist you with your debt consolidation. A second mortgage is a subordinate mortgage to your original home mortgage, and will not change the terms of your original mortgage. You will be able to lower the interest rate on your debt and you may even qualify for a tax deduction because the interest will be combined with your home mortgage. However, be careful of predatory lenders that offer you more for a cash out refinance than your home is worth. In addition, if you plan to sell your home in the future, this may not be the best option for you in terms of debt consolidation.
 
Debt consolidation can be a confusing process, with many options to choose from. Therefore, to learn more about dealing with debt, visit www.ftc.gov/MoneyMatters. In addition, if you have questions regarding your rights in terms of debt collection, visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm.