Are you tired of making payment on several high interest rate credit cards every month? Why not consolidate them into one low monthly payment. Debt consolidation is easy if you have the right collateral. Many banks and credit card services will loan over 100% of the value of your home to help you get your credit under control. How many times have you heard this and wondered what it really means?

The term debt consolidation literally means taking out one secured loan to pay off unsecured debt. A secured loan is one that is backed by some type of collateral. For example, a home or business, or something with more value than the loan. Usually a secured loan has lower fixed interest rates than an unsecured loan. An unsecured loan is a loan that has no collateral. For example, credit cards and pay day loans are unsecured loans. If you fail to pay them they will not repossess your house or business. With an unsecured loan there is usually a high rate of interest and outrageous service fees attached to every monthly payment.

There are also credit counseling centers that can help you to reduce your debt. These centers help you understand your spending habits and help you budget to get your debt under control. They can also help you by providing a mediator between you and the credit card companies, to lower your interest and make a livable payment plan that allows you pay off your debts.

Then there is debt settlement. It is becoming increasingly popular with people who have a lot of debt and can’t or won’t, file bankruptcy. You stop paying bills to the original creditor and instead make regular monthly payments to the settlement company. As your accounts fall further behind, the balances grow. The settlement company will negotiate to lower the balances, usually for 50% or less, depending on the debt. Most people can be out of debt in two years or less using these programs.

It’s not perfect and your credit rating will suffer in the short run but sometimes that is the price you have to pay to get your debt under control. Also make sure you are dealing with a reputable company. There are many fly by night companies that will try to get your bank information, then just take your money and not pay your bills.

There are ways you can pay off the debt yourself. The first thing is to cut up the credit cards and don’t accumulate more debt while trying to pay off the old ones. Secondly, pay the cards with highest interest rates off first. It’s the high interest that is killing your budget. Third, make a budget plan and stick with it. This takes a lot of commitment and sacrifice, but to be debt free is worth the effort.