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Consolidating your consumer debt: A smart idea?

Many of us have considered debt consolidation for lowering credit card payments and other financial obligations. The question, of course, is whether debt consolidation actually assists with debt relief. Washington, DC, residents who are seeking assistance with their consumer debts may be able to pay off their loans and improve their credit if they make the right choices.

In many instances, consumers turn to a new loan to pay off other debts. In our troubling financial times, however, it can be difficult to find a loan with favorable terms and conditions for this purpose. Lower credit scores caused by high credit card balance can contribute to challenges related to obtaining such a loan. Alternative lending methods are thus becoming more prolific, with peer-to-peer borrowing becoming increasingly common. These options, which include several Internet sites, generally only help borrowers with good credit, but they can be helpful options for those looking to learn more about debt consolidation. Banks and credit unions are also great resources, as they can provide loan consolidation tips for consumers in all financial situations.

As an alternative to debt consolidation, a debt management plan can also be beneficial, but only if correctly overseen. In many cases, debt management is facilitated through credit-counseling agencies that pay your creditors for you at a reduced interest rate. Even though this may sound like a positive change, a relatively small percentage of people actually benefit from the provisions of a debt management plan.

For those people who are facing tens of thousands of dollars in credit card and other consumer debt, personal bankruptcy might be the best option. Even though bankruptcy can carry a stigma, there is no reason to be ashamed to seek financial help. Bankruptcy attorneys can help you turn around your finances so that you are prepared for a bright financial future instead of drowning under debts. Consulting a qualified bankruptcy attorney may help you on the road to future financial health.

Source: MSN Money, "Will debt consolidation help or hurt my credit?" No author given, Dec. 27, 2013

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