* line of credit – this is mostly associated with home ownership, with a line  of credit, your basically getting a loan which is secured by the equity that you’ve built in your home. The line of credit is a second mortgage and typically has a lower interest rate than other loans, be sure that you get a fixed interest rate so your payment is locked and won’t increase with every rate jump.

*  bank loan – this may  be your best option for debt consolidation, especially if you have no equity in your home, and you can shop around for a loan with the best rate and term options.  The problem is that if you get turned down for a bank loan, it shows up on your credit report as an inquiry and may leave a negative footprint on your report, so make sure your financial situation would allow you to qualify for a personal bank loan before you apply. Many banks can do a preliminary review for you without risking your credit score.

*  debt consolidation company – there are a number of companies that offer their services in helping you pay down your debt.  In this case, they’re actually doing a service that you might possibly be able to do for yourself.  They will negotiate payment rates with your creditors and pay these bills for you.  They set up a payment arrangement with you to charge you a certain percentage of the total of the monthly payment they’ll make for you, and sometimes get money back from your creditors for helping to negotiate the rates

*  credit counseling – in most cases these are government sponsored organizations that will help you look at your debt and make recommendations on which way to go.  Sometimes, if your debt is high enough, they’ll help you make arrangements with your creditors to get them paid, and charge you a small fee for the service.  Other times, they’ll either give you some ideas for how to reduce your debt load, or recommend bankruptcy.  Many times, the services they offer are free and because of this, they are the best place to start searching for a solution.

Deciding on the best way to consolidate your debt is important. Do a lot of online research and look into any non-profit counseling services before looking at “paid” consolidation options. You may not need to pay a company to do something you can get done yourself. A little research, dedication and sacrifice can go along way in your journey for financial freedom. That said, there are several companies that offer incredible services, so if you find that debt counseling services and online research are not enough, don’t be afraid to contact a company for help.

One option is to request an extra debt consolidation loan so that you can consolidate all of your monthly bills into one easy to manage payment. Credit counseling agencies can be a valuable resource in helping individuals at reducing interest rates and often the total debt balance.

One method popularly used to consolidate debt is to transfer your debt to a low interest rate credit card. This is a good option for many, but as many of you already know, low interest rate credit cards are not always fixed rates. In other words, if you don’t pay down your balance prior to rate increases, you may very well find yourself paying an extraordinarily high rate of interest.

If you are fortunate enough to have equity in your home, applying for a home equity loan may be a great opportunity to use the funds to pay off other lines of credit. You may also be able to use your home’s equity as collateral  on a consolidation loan. Financial institutions will often issue consolidation loans backed by a home’s equity.

Resources:

http://www.frankyoung.net/revealing-debt-consolidation-secrets-for-anyone.html

http://barex.biz/2009/credit-repair-debt-consolidation-secrets/