Jul 15

Debt Consolidation - Home Equity Loan Alternatives

Debt consolidation should not be the first step when you find yourself in heavy debt; it ought to be one of the last, followed only by filing for personal bankruptcy. While consolidating debt is advertised as a quick solution to financial trouble, it carries troubles of its own, including the temptation to accumulate more debt after your charge card balances are eliminated.

Debt consolidation can be difficult, especially if you do not have a house. The easiest way to combine existing bills is to apply for a home equity loan. They are affordable when put side by side with other kinds of loans, and the interest is deductible from Federal income tax. One problem - If you don't own a home, how can you borrow money?

If you don't have a house, you can still find financing to combine your debts into one manageable one. There are several choices available to you:

Consolidation agency - There are professionals who can help you with your financial troubles. Debt consolidation agencies can create a management plan that will allow you to pay off your debts. They can also talk with your lenders to possibly waive fees and lower interest. Consolidation companies are often for-profit companies; you will have to pay them a fee to use them. On the other hand, it may be your only solution if you cannot find other sources of funding.

A personal loan - Not likely for many borrowers, but you might be able to get an unsecured loan from a bank or a credit union, particularly if you have a friend or relative who is prepared to cosign the loan. Keep in mind that if you do not pay, your cosigner will be held responsible for paying back your loan. You don't want to lose friends or relatives over a bank debt.

A charge card loan - You might be able to borrow from a credit card, if necessary. A few companies offer short-term, low-interest loans for balance transfers if you apply for a new account and move a current balance over from an old one. This can be tricky; failing to pay attention to the fine print by making a late payment could cause your rate to skyrocket, which will make a bad situation worse.

Getting out of financial trouble can be a difficult task. There are a lot of ways to do it, and you can do so even if you don't own a home. It just takes patience and diligence.

Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com, a site devoted to debt consolidation, personal bankruptcy, establishing credit and credit counseling.

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