If you believe in the good in people then you probably also believe that few people take out loans, or other forms of credit, with the intention of skipping the bill. With credit counseling, debt consolidation, and even bankruptcy on the rise, it's a little hard to believe in the good in people. But at least many are making that last attempt at making good on their debts through debt consolidation before heading straight to bankruptcy.

It's no wonder that so many are having to turn to debt consolidation these days. The average household debt in this country is close to $10,000. Much of that is credit card debt with the average consumer carrying 8-10 of the little buggers. Debt continues to rise steadily every year, as do the interest rates associated with carrying that debt. Debt consolidation is obviously an appealing solution to those who have become buried in the stress of their finances.

Debt consolidation can be beneficial in combining all of your credit card payments into one lower monthly payment. Debt consolidation can save you a large amount of money right out of the gate by reducing or eliminating penalties and interest previously accumulated. Reduction of your average interest rate is almost always a benefit of debt consolidation as well as keeping you from having to file bankruptcy to escape the mounting pressure.

As with any financial decision, debt consolidation needs careful consideration. You should be aware of all of the options available to you and how each one will affect your credit, how long it will affect your credit, and how your bottom line will be affected. Debt consolidation is a simple solution for some, but may just add fuel to the fire for others with more complex issues. Just make sure that, whatever solution you turn to, you take the life lessons regarding finances and credit with you to your next credit decision. First you might want to consider the services of a Certified Debt Arbitrator

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Like many Americans, you may be living under a crushing debt load. Maybe your bills are coming in even before you have paid those from the previous month. Or maybe you're getting endless phone calls and letters from collection agencies. You may even be considering bankruptcy!

If any of this sounds familiar, a debt settlement plan may be your answer. An effective debt settlement plan will allow you to eliminate your debts for pennies on the dollar.

You could hire a debt settlement company to do it for you, but if you have the determination and the desire, you can create and put into action a debt settlement plan yourself!

Here are a few tips for creating an effective debt settlement plan:

1. Determine how much you can afford to pay in total for debt settlement. Write down all of your essential expenses, such as rent, mortgage, meals, gas, etc. Subtract this amount from your monthly net pay. Whatever is left over is what you can pay out each month for your debt settlement plan.

2. Make a list of all of your delinquent accounts and the amounts owed on each.

3. Beside each creditor's name and balance owed, write down how much of your debt settlement budget you can pay toward that account to settle it. The closer to 50% of the balance that you can get, the better chance you'll have of getting your offer accepted.

4. Contact your creditors (or the collection agencies that are representing them), explaining your plan and how it affects them. Explain that your current financial situation simply won't allow you to make your payments as you agreed earlier.
Tell your creditors how much you owe in total, how much you have available to pay off all of your debts, and how much you can pay to settle their particular accounts. Let them know that your offer is being sent to all of your creditors, and the ones who accept the offer first will be paid off first.

5. You'll receive some acceptance letters as well as rejections. Keep a copy of the acceptance letters for your records and immediately send in the amounts agreed upon, requesting a receipt stating "paid in full".
The next month, repeat the process while adjusting your debt settlement offers upwards. You can now afford to offer each creditor a higher percentage of the outstanding balance because you have fewer debts left to pay off. Again, you'll receive some acceptance letters and perhaps a rejection or two.

6. Keep repeating this process each month until all of your debts have been settled.

Here are a few important things to keep in mind:

- Insist on getting all debt settlement agreements in writing, and never pay the amount agreed upon until you receive the signed written agreement. Your creditors could easily accept your offer on the phone, then "forget" about the settlement offer after receiving your payment.

- Keep all of the signed agreements and receipts for your records, even after the accounts have been marked "settled" on your credit reports.

- Be very careful with your finances in the future to ensure that you never have to go through the debt settlement process again.

- If you simply feel uncomfortable dealing with your creditors yourself (or incapable of doing so), you can select a reputable debt settlement company to do it for you. If you choose carefully, a good debt settlement company can do the entire process quickly on your behalf.

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If you, like many Americans, are constantly stressed out due to an overwhelming debt load, you're probably wondering if you should consolidate your debts. The answer is maybe.

First of all, you need to ask yourself afew basic questions:

1. If you consolidate your debts will you have the discipline to use the money saved each month to help pay off the new loan?Many people take out a debt consolidation loan only to spend the money saved on frivolous items. Others even end up borrowing again. In neither of these cases were their problems solved by consolidating their debts.

2. Will the debt consolidation process actually put you in the position of having to stay in debt for two or three times as long as it will take to pay off your current debts?

If so, you may be better off if you simply get a second job (or a higher paying one) to help pay off your bills. Unless there is simply no other alternative, it makes little sense to trade in several small debts that can be paid off in three years for one larger debt that you'll be paying on for ten years!

3. Do you have assets that you can sell to pay off one or more of your bills? Selling a rarely used item such as a boat or other luxury item might make more sense than trying to consolidate your debts.

4. Do you have cash in a savings account that you can use to pay off a couple of high interest accounts? The best way to "save"" or "invest" for your future is to eliminate those 20% interest credit card debts, and it makes a lot more sense than consolidating your debts!

If you do decide that your only realistic option is to consolidate your debts, here are a few tips:

- Shop around for the absolute best deal for your debt consolidation loan. Just one percent less in interest can make a huge difference on a large multi-year loan.

- Don't automatically choose the longest repayment term in an attempt to minimize your monthly payments. You can save thousands in interest charges by choosing a shorter repayment term.

Better still, by paying close to the maximum amount you can handle you'll be less likely to put yourself in the position of having to consolidate your debts again in the future.

- After taking out a debt consolidation loan and paying off the rest of your debts, pay every penny of the monthly savings towards the balance of the new loan. Your overriding goal should be to become debt-free as soon as possible.

- Control the urge to go deeper into debt again. If you find yourself wanting to borrow for something else, remind yourself how it felt being up against the wall financially before you decided that you needed to consolidate your debts.

A little discipline will go along way towards helping you achieve your goal of a happy and successful future. It will also help you avoid having to consolidate your debts again and again.

Discuss your decision with a Certified Debt Arbitrator

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