Managing overwhelming debt is a more common problem than most people think. Unfortunately, people coping with large amounts of debt are often unaware of all of the options they have or, worse, think of all debt solutions (from debt settlement to debt management to bankruptcy to debt consolidation) as more or less the same thing. They’re not. Debt consolidation is a completely different approach to debt than all other methods. Debt consolidation is not right for everyone and not everyone can qualify for it. But for the right people in the right situations, debt consolidation can be by far the best method of getting out from under large amounts of debt … without hurting your credit!

Unlike bankruptcy, you do not need to get a judge involved and file legal paperwork to consolidate debt. Unlike debt Debt Consolidation Texas management, you do not need a counselor or agent to act on your behalf. And unlike most plans of debt relief, debt consolidation done correctly will not hurt your credit score or your financial reputation.

Of course, debt consolidation is not for everyone. Financial woes have a way of being unique, and every single person or family facing mounting debts has a lot of special factors that come into play. Financial plans designed to help people cope with debt can never be considered as one-size-fits-all.

Besides that, not everyone (even those who want and need it) can qualify for debt consolidation.

Quite simply, debt consolidation is a way of rolling many debts together, taking out another loan to pay them off, and then managing the consolidated debt. In other words, you take out a big loan, use it to pay off all of your credit cards and other debts, and then pay off the big loan.

This sounds counter-intuitive. For the person already saddled with debt, the thought of adding another debt is probably terrifying! And how can adding one more colossal debt to the mixture help you?

The answer is not that you are simply getting another loan, it’s really a way of re-organizing or re-structuring your debts. For example, let’s say you have seven credit cards. You’re maxed out on three and you owe differing amounts on the other four. Altogether, you owe $82,000 on credit cards. Now let’s say that there is $22,000 in car notes and another $4,000 on a revolving plan from a furniture store and the total debt adds up to $104,000. That may sound high to some people, but it is really not all that unusual!

Now look at the interest rates on those loans. This can take some detective work, but that information should be available on your monthly statements. If it is not or you can’t find it (or figure out what they’re talking about), call the toll-free customer service number most such companies have and discuss the loan with them. You want to know the interest rate, which is the percentage of the total loan the company charges you for the privilege of borrowing its money.