Debt consolidation might be the only solution for you if you are in a real bad debt situation. If you are in a bad debt situation it means that most of your income is going towards paying bills. And sometimes it means missing your bills to take care of your day to day needs. Missing bills means late fees, which means more debt. To get out of this terrible debt cycle you must seriously think about debt consolidation.

Find A Good Lender

Debt consolidation simply means consolidating all your debt into a single loan. To consolidate your debt you have to first find a debt consolidation company. Compare several lenders and check into their business reputation to see whether they are okay to work with. Talk to their counsellors and see how they respond to your queries and what kind of solutions they offer. Get a debt consolidation quote from each company to get an idea of monthly payment that you would be required to make. A good lender will look at the overall picture and not just be interested in making money out of interest rates.

Once you have found the best debt consolidation lender, you should provide your true financial picture to your counselor. Remember that if you want a complete solution you have to be truthful about your financial condition. Your debt counselor will offer you couple of solutions, which would be tailor made for your financial situation. You choose the one that you think is the best.

After your debt is consolidated, your debt consolidation company will pay off your lenders. There are two ways of doing this. You could choose to take a loan and pay off all your lenders and then make a monthly payment for the loan. Or you can choose to make a monthly payment to the consolidation company, which would then disburse the amount amongst your creditors. Either way you would be making a single monthly payment. This would be a huge relief for you if earlier you were making ten or more payments every month.

Financial Discipline

Debt consolidation is only helpful if you are serious about solving your financial problems. There is no point in consolidating your debt today if in the immediate future you are going to add more debt on your credit cards. Most debt counsellors would advise you to keep only one credit card, which you should only use occasionally.

In order for you to get out of debt you have to maintain financial discipline in your day to day life. Your debt counselor will give you important financial tips to make a good monthly budget and how to avoid getting into debt. So you can see that debt consolidation might just be the solution you are looking for to get back on the path of financial well being.