Debt Consolidation Credit Counseling In Phoenix

An economic crisis is gripping the world as of the end of 2008. Families around the world are squeezed and finding it increasingly difficult to meet their obligations. In order to provide a home for their family, transportation to get them around, a means to a better education and nice products for personal enjoyment, many families will extend additional debt beyond their means to pay them back.

When we borrow money it's often just the amount borrowed and the amount of the monthly payments we think about. The interest being charged needs to be considered as well, especially in long term loans or high interest loans. You can end up paying a substantial amount of money just on interest payments if you're not careful. Even the so-called no interest loans can carry significant penalties if not paid off in time. These penalties can come in the form of extremely large interest rates applied to the balance due.

You can take out a loan to help yourself without going even deeper into debt which seems to fly in the face of the rule stated above. If you have a number of loans already such as car payments, credit cards, money due on lines of credit and the like the total monthly payments can become overwhelming and you find yourself robbing Peter to pay Paul. A debt consolidation loan can be the answer here.

There are a few different options for acquiring debt consolidation help, although the most common tends to be debt consolidation loans, whereby the consumer will take out one loan to pay all outstanding credit card/other debts. Doing this combines all the interest into a basis of one loan amount, thereby (in most cases) reducing the overall monthly obligation for the consumer.

Other alternatives exist for debt consolidation help, mainly circumstances where you can negotiate the amount of your debt down by a certain percentage to help pay off the obligation through a third party intermediary. There are also circumstances where you can negotiate to have the interest reduced based on income and ability to pay back the debt, again through an intermediary and with meeting certain qualifications.

The consolidation loan most widely used is probably the home equity loan. On the plus side you can usually get a lower interest rate with a lower total monthly payment and have only one loan to make payments on. On the negative side the available equity in your home will be reduced (which can at times cause huge problems) and your home becomes the collateral for the loan.

In this circumstance, if you fail to repay the loan then the lender has the right to take your house. Tread carefully with any structure that is backed by your home and be sure that you can afford the pay back agreement.

Finally, it is critical to ensure you are well positioned to pay off any restructuring agreement through a solid monthly budget of your income and expenses. If you do not have sufficient income to meet the repayment terms then you will likely default on the consolidation loan and lose out on opportunities to improve in the future. Use a solid budget, proceed with caution and restructure your debt when appropriate to fix your families finances.