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What Is Debt Consolidation and Credit Counseling?

Debt Consolidation is a term used in TV commercials from several different industries which has caused lots of consumer confusion. Everywhere you turn there seems to be a company offering you debt consolidation and credit counseling programs. Does it mean mortgage refinancing? Is it a way to reduce your credit card fees? Is it the same as credit counseling?

Yes. Yes. And Yes depending on who you are listening to and what your particular situation is.

The point is that debt consolidation allows you to combine several payments into one with lower overall fees and a lower interest rate. Consolidating your debts into one lower monthly payment can be done in several ways.

The best way to consolidate debts really depends on your personal situation. The initial question is do you own a home that is worth more than you owe on your mortgage? If yes, then you may be able to use that equity to consolidate your debts which is often the preferred way. If not, then a debt management program from a credit counselor may be the best way to consolidate your debts unless your financial situation is severe enough to warrant consolidation through debt settlement which you may read about here.