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You are swimming in debt. You have 4 credit cards maxed out, a car loan, a consumer loan, and a house payment. Simply making the minimum payments is causing your distress and certainly not getting you out of debt. What should you do?

Some people feel that debt consolidation loans are the best option. A debt consolidation loans is one loan which pays off many other loans or lines of credit.

Im sure youve seen the advertisements of smiling people who have chosen to take a consolidation loan. They seem to have had the weight of the world lifted off their shoulders. But are debt consolidation loans a good deal? Lets explore the pros and cons of this type of debt solution.

Pros

1. One payment versus many payments: The average citizen of the USA pays 11 different creditors every month. Making one single payment is much easier than figuring out who should get paid how much and when. This makes managing your finances much easier.

2. Reduced interest rates: Since the most common type of debt consolidation loan is the home equity loan, also called a second mortgage, the interest rates will be lower than most consumer debt interest rates. Your mortgage is a secured debt. This means that they have something they can take from you if you do not make your payment. Credit cards are unsecured loans. They have nothing except your word and your history. Since this is the case, unsecured loans typically have higher interest rates.

3. Lower monthly payments: Since the interest rate is lower and because you have one payment vs many, the amount you have to pay per month is typically decreased significantly.

4. Only one creditor: With a consolidated loan, you only have one creditor to deal with. If there are any problems or issues, you will only have to make one call instead of several. Once again, this simply makes controlling your finances much easier.

5. Tax Breaks: Interest paid to a credit card is money down the drain. Interest paid to a mortgage can be used as a tax write-off.

Sounds great, doesnt it? Before you run out and get a loan, lets look at the other side of the picture - the cons.

Cons

1. Easy to get into further debt: With an easier load to bear and more money left over at the end of the month, it might be easy to start using your credit cards again or continuing spending habits that got you into such credit card debt in the first place.

2. Longer time to pay off: Most mortgages are the 10 to 30 year variety. This means that rather than spend a couple of years getting out of credit card debt, you will be spending the length of your mortgage getting out of debt.

3. Spend more over the long haul: Even though the interest rate is less, if you take the loan out over a 30 year period, you may end up spending more than you would have if you had kept each individual loan.

4. You can lose everything: Consolidation loans are secured loans. If you didnt pay an unsecured credit card loan, it would give you a bad rating but your home would still be secure. If you do not pay a secured loan, they will take away whatever secured the loan. In most cases, this is your home.

As you can see, consolidated loans are not for everyone. Before you make a decision, you must realistically look at the pros and cons to determine if this is the right decision for you.

If youve been wondering lately "What is loan consolidation?" then you are in luck, because education loans are about to get a whole lot easier to pay off.

President Obama student loan proposals are now impacting college debt consolidation and federal loan repayment for millions of college graduates.

However, while the advantages of federal student loan consolidation are plentiful, so are the pitfalls. It is important for federal student aid borrowers to understand the risks and rewards when they need to consolidate their educational loan.

Advantage #1 - You will save time and money. No fees, simple paperwork process. No inancing decisions based on your credit rating. The new program is reportedly available only from Jan. 2012 through June 2012 will also be offering a slight deduction for selecting the automatic debit option in repaying your loan. This not only helps you make timely payments, but it also helps reduce the amount of interest youll be charged over the life of your federal direct loan.

Advantage #2 - You may improve your credit score by avoiding default. Consolidating education loan debt could be the ticket to staying current and not defaulting on your financial obligations. These types of loans cannot currently be discharged for dismissed (except for loan forgiveness programs); not bankruptcy, not by hope and prayer. Not by ignoring the threatening collection agent letters. These loans must be repaid! So by consolidating, getting a smaller monthly loan payment, and sticking to a repayment schedule consistently, over time you will pay off your debt. Federal student loan consolidation then gives you a path to resolving your financial problems related to college debt.

Advantage #3 - You will avoid frustration by only having one bill to pay each month. Having to keep track of 2 or 3 different bills each and every month can seem daunting; so, by consolidating into a new federal loan consolidation program, you will not only lower your monthly bills. Youll also lower the number of checks you will have to write and mail each month!

College was worth the price of admission. Your college degree opens many new doors to career advancement now and in the future. But now, repayment of those college loans looms large. And the new federal student loan consolidation program available for only six months by the U.S. Department of Education (Jan. 2012 - June 2012), could be the winning ticket to taking advantage of direct loan consolidation.

There are also disadvantages lurking around the edges of the new federal and private student loan consolidation programs: Some consolidation programs make you ineligible to get your loans forgiven if you later enter a qualifying career. Some federal loan consolidation programs exempt certain types of loans, and loans that were taken out at an earlier time period. Oftentimes, old loans carry a lower interest rate, so consolidating those at a higher level of interest makes no sense. Remember to compare options; your student loan consolidation rates should at the very least be better than you can get from a private federal loan consolidation program.

But the U.S. Governments Dept. of Education website now offers a variety of loan calculators aimed at helping college graduates have access to online tools aiming to help them compare loan consolidation packages and help them determine the best way for them to pay off college expenses.

The official ed.gov website is undergoing a number of updates after President Obamas student loan forgiveness plans came to light in the media. By providing comprehensive details on various ways to finance a college education, this website will ultimately offer yet another advantage to those seeking federal student loan consolidation.

While paying off these loans may never be easy, making the sacrifice and the commitment now to honor your loan commitments will pay off in other ways: You will earn the satisfaction of having followed through with one of your major financial commitments you made early in your adult life. And, you will demonstrate to yourself and to future creditors that you are an excellent credit risk.

Theore, the advantages of federal student loan consolidation are obviously a goal youll want to consider as you dig yourself out of debt.

Are you like the majority of Americans, continuing to cover excessive charges and payments to your charge cards? Will it seem like the greater you pay, the higher you debt will continue to climb? This is due partly to higher interest levels and a poor economy.

About the Author

Are you never able to pay off credit card bill at the end of the month? Find out how to get your debt paid off faster - starting right now - at the Debtopedia website. Visit http://www.debtopedia.com to get your free copy of my special report "Secrets of Credit Card Debt" now.

Debt Consolidation Programs

programs is going to take all your high interest debts that you owe and consolidate them into one monthly payment, having a lower rate of interest. Your monthly payment for that one loan ought to be a substantially lower payment for you every month. The issue for most consumers with this particular loan plan is that they will have to have collateral being a home or another good assets in order to get the credit.

With collateral you can aquire a lower payment per month, but missing a payment is not an option. If you do miss a payment, plus youve got put up your property up as collateral, you run the risk of having your home repossessed. One other issue with investing in this type of home loan is many people find yourself repeating their same improper habits and run up more credit card debt.

Debt securities and exchange consolidation is a popular method of restructuring, many calculations in a reasonable amount each month due. What debt consolidation programs are a new law to create, whether through a personal loan, credit card company, bank loans or home equity line of credit is. A reduced amount and lower tax rates are some possible benefits, but there are some known risks. Relying on a debt consolidation establish contacts withLenders, lower prices and work out a solution is another method that has its negatives and positives.

Putting all your payments will be together in the short-term assistance, but not the actual debt away. Monthly amounts and interest rates fall, but consolidation is not always the best course financially. The ultimate prize for a consolidation loan, you could cost more than if you did nothing in the first place. This can be a big problem with BillConsolidation services.

Often, homeowners use their property equity to debt consolidation and the use into account. It really is research or not, whether it be a good idea to avoid bankruptcy. There is a risk of becoming homeless, when a high number of payments not made.

Many people think that bankruptcy is the only alternative to credit and bill consolidation phase is located. A good step would be to repay as much debt as possible before you bringengaged on a consolidated loan and consolidate business. If you are in savings that can open up a 401k or other investments, you may not need to consolidate your debts. Life insurance can also be accessed or sold when you're younger and not sick. You need to pay more than the minimum each month, in order to operate a debt and bill consolidation program.

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Many students and parents cannot afford the rising costs of a higher education. Majority of these students have multiple student loans. These loans belong to different creditors. These creditors have different terms of agreement, interest rates and billing cycles. The loan allows students to have these loans turned into one new loan. This new loan would be handled by one creditor.

When students consider choosing a loan consolidation creditor they need to consider the creditors requirements, terms of agreement, interest rates and benefits. Student loan consolidation has two methods; these are Federal and Private loan consolidation. Most private creditors advise you to first apply for a Federal student loan consolidation to maximize federal benefits.

Federal loan is when the U.S. Government or the U.S. Department of Education is the creditor. Federal student loan consolidations are specifically created for low-income students and parents. There are two programs available for Federal Loan Consolidation: Federal Family Education Loan Program (FFELP) and Federal Direct Student Loan Program (FDLP). These programs consolidate federal loans including Stafford Loans, Federal Perkins Loans and PLUS Loans.

For a student to be eligible for federal loan consolidation the following would be checked or required:

- Credit history would be checked.
- A student would need to be a U.S Citizen or a permanent resident.
- The student must be either a full or half-time student.

Federal loan limits are set by Congress. These are the limits as follows:

- Year 1: $2,625
- Year 2: $3,500
- Years 3 & 4: $5,500
- Graduate $8,500

Ten years is the standard repayment period. This period can be extended up to 25 years for students with a $30,000 debt. Federal loan consolidation has a standard formula for interest rates. The interest rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%.

Private Student Loan Consolidation is when a private company or creditor combines multiple private loans into one new loan. This creditor handles the loans, allowing the student to pay for one loan to one creditor. To name a few of these creditors are NextStudent, Chase and EdFed. For private creditors, requirements are based on each companys standard or requirements. Credit qualification may vary as well if there is a co-signer.

Requirements would commonly be:

- The student must be enrolled at least half-time at a 4 or 5 year college or university.
- The student must be the age of majority in his/her state.
- He/she must be working on their undergraduate or graduate degree.
- There is no income requirement.
- Co-signers are not required to provide proof of income.

The interest rate for private loan consolidation is set by the creditor. Interest rates will be based on the students credit history. The cost would be relatively low if the student and the co-signers credit are approved. The graduate has six months after graduation before being required to start repayment. The standard term would be 15 years.

About the Author

Zack Fair writes for a Bad Credit Loans company Oops Home Loans, an Australian lending company offering debt consolidation, credit impaired inancing, home purchase and renovation.

The topic of debt consolidation is an important one to discuss, and not only because we are just beginning what could be a long recovery from the economic recession of the past year. The recession has not caused debt problems for most Canadians. It has merely exacerbated a problem that already existed before the recession hit.

Consider the results of a Vanier Institute report released in early 2009. Called The Current State of Canadian Family Finances 2008 Report, the study includes some troubling numbers.

Debt loads are in what the reports authors call the "danger zone". Average household debt increased to more than ,000 in 2008. Looking a little more closely, the report also shows that the total debt to disposable income ratio climbed to 140% in 2008 - the highest level in 44 years.

Of equal concern is the ratio of consumer debt plus mortgage debt.

The Debt Service Ratio (DSR) measures the percentage of gross income spent on interest on household debt plus payments on the principal. A "dangerous" DSR is anything in the 40% range. In the U.S., 6.3% of households had a dangerous DSR at the time the Vanier study was conducted. In Canada, 4.4% were in the danger zone. That 4.4% translates into 600,000 households. Unfortunately, many of those households are in the lowest third in terms of income. In other words, low income households are struggling harder than most with unwieldy consumer debt.

The report also reveals that spending and debt are rising faster than incomes: "The average household income rose to ,200 in 2008 and was up by 11.6% since 1990.

The bottom line - people are spending more than they earn and carrying enormous amounts of debt, much of it in the form of high interest credit card debt. The average Canadian has more than 2 credit cards, and in the five years between 2002 and 2007, MasterCard and Visa transactions jumped 60%, with the total value of sales increasing by 55%.

Although some claim the recession has ended, the pain will be felt by many well into 2010 or beyond. Job losses continue to mount and our economic difficulties threaten to push many people into insolvency.

Many mortgage brokers are trained to offer debt consolidation services to help homeowners get a handle on their debt. For those with a decent amount of equity in their homes, a home equity loan or line of credit - at current low interest rates - can give them the money they need to pay off high interest debt. If you are concerned about your personal debt, talk to a professional about debt consolidation with a home equity product.

Asking for a student loan is easy, but repaying it can not only difficult but can also extend longer than one might expect. Students who have decided to consolidate their loans find that their original plan of repaying their loans right after they finish their studies are often put on hold for one reason or another. As a solution, they look for student loan consolidation repayment options.

A couple of the most common reasons why students search high and low for repayment options are the inability to land a job right after they graduate, and the lack of sufficient salary to answer for their past student loans. During this time, they have difficulty in fending for themselves, let alone repay their student loans. Student loan consolidation provides them with an opportunity to finally get their finances on the right track and be free from debt sooner than later. Obviously, one of the best ways to do this is to consolidate the repayments so that only one repayment per month is required.

Another one of the many options are to apply for graduate repayment plan, which is designed to start with low repayments that increase gradually until the balance is repaid. Students can specify how much the repayments should increase according to their current financial capability. Practical methods include juggling sideline jobs in order to earn extra income and living below their current means until they can afford to buy things without having to worry about how to cover the current months installment payment. As a last resort, students can apply for forbearance to suspend their repayment obligations in case they are having extreme difficulty in their present financial state.