Debt can be a crushing burden, particularly when you have multiple bills coming in. Mortgage payments, credit card payments, student loan payments, and more can quickly eat up your paycheck and leave you with nothing to live on. It gets even worse when your creditors start submitting your debts to collection agencies. One of the ways you can gain relief is through consolidating debt. Here are some things you’ll want to consider.

A QUICK SUMMARY OF THINGS TO CONSIDER WHEN CONSOLIDATING DEBT

Debt consolidation doesn’t require a specific program. The Federal Trade Commission states that any program or loan that brings all or most of the debts under a single payment. Some people do this through a second mortgage. Others go through debt consolidation programs that help them make the payments through credit counseling agencies. In the latter case, they aren’t taking out additional loans for you. They’re just negotiating with your creditors to get lower payments and help you manage them.

Always Do Your Research

Not all debt consolidation programs and loans are creating equally. You have to exercise caution, particularly if you are working with a third party agency. Research their track record and see whether there are any claims for mismanagement or fraud against them. Credit Cards Help recommends looking for organizations listed with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. These agencies have been vetted and must be certified to be able to serve you and your debt. Sometimes these are also known as debt management plans.

If you decide to skip the third party agency, be cautious with mortgages and credit cards. Transferring a high balance credit card debt to a lower interest credit card debt (providing your debt is at a level where this is possible) can be a good move but always check the fine print. Many credit cards offer low to zero interest initially, but after a set period of time you may see

• Interest rates go up significantly
• Acceleration clauses
• Increased penalties for failure to make minimum payments

Double Check Your Credit Reports

Your credit score will impact the deal a consolidation plan can work out for you. Obviously, you must make sure that it’s accurate. Mistakes happen, and you might have one debt listed twice. Check over it through free credit reports. If anything is incorrect, contact the reporting agency and go through the necessary steps to fix it.

Watch the Interest Rates

Whether you handle your debt consolidation independently or through an agency, always keep an eye on the interest rates. Bank Rate reports that when consolidating private loans, variable interest rates are common. You need to make sure you find out whether there is a maximum or any protections to keep the interest rate from being too high. A slightly higher interest rate is common, but it shouldn’t be so high that it removes the benefits of consolidation.

Consolidating your debt can help you get a handle on it before it devours your finances. Just make sure that you research the options to find the best one to help you. Double check your credit reports for errors and watch the interest rates. You may wind up paying more in interest, but it shouldn’t be too much.

And if you’re having problems figuring out what’s best for you, consider consulting with an attorney from the Van Horn Law Group.