The mechanics of debt consolidation are quite simple. The strategy is to combine all your ancillary debts into a single consolidation loan. This loan generally is for a fixed term, three to five years, and the interest rate may be slightly lower than what you are paying now. The lender will then work with your creditors to come to an acceptable program to pay off your debts one by one. Meanwhile, you, the debtor, will promise not to add to your debt load at all. This requires a great deal of discipline and a lifestyle-changing act upon your part.

As you pursue help in the debt management forest of advisors and counselors, keep this one factor as a target. The best program is to have at its center a very low interest debt consolidation loan. Remember, you will only succeed at this program if you do not add to your debt package.

Having all your credit card debts and other ancillary debts cleaned up does give you ‘carte blanche’ to go out and create another mountain of debt. No – you are still in debt. The major difference is that instead of cutting checks for numerous monthly bills, you now are cutting one check. That one check will be a large check, but through good management and financial counseling, it will be an amount that your current income and budget can handle. Never take a debt consolidation loan that has an annual percentage rate (APR) higher than the average APR of any credit cards or loans you are currently paying.

One problem you might be thinking about with a poor credit report comes greater difficulty in securing a low interest loan. That is true. However, if you work through a reliable debt consolidation management service, they are already considering that factor, and are able to find lower interest loans for this particular type of program. That is why it wise not to just do all your searching on the Internet for a debt consolidation loan.

You may find that the best place to find a low interest debt consolidation loan program is through a local lender. It might be your personal bank or your mortgage company. Whatever the source, remember the key is to find a low interest debt consolidation loan at the foundation of your debt resolution plan.

Here are some things to avoid when looking for the best debt consolidation loan.

• HELOC (Home Equity Line Of Credit) Loans are loans that utilize the equity of the borrower’s home as collateral. Your home is your most prized asset and should not be put at risk for bailing out credit card debt or any other type of unsecured debt. If you default on the repayment of the loan you could easily lose your home, which is a terrible consequence.
• Stay away from any type of consolidation loan that is secured by a fully owned asset of the borrower. If you are already in trouble with debt, involving something that you own free and clear as collateral to secure a consolidation loan is asking for trouble. If you have trouble managing your finances and you put up an asset to secure a loan it is quite likely that this gamble will pay off, but not for you. Be ready to kiss your asset goodbye.
• Another danger zone for a debt consolidation loan source is anyone who advertises an ‘easy-to-get’ debt consolidation loan. There are no good consolidation programs that are easy to acquire.
• Beware of debt consolidation programs that stretch out the repayment plan for a much longer than ordinary time period. The interest rate may seem to be quite attractive to you and lower than what you are currently paying, but if you will do the math, you may find out that if you would follow this kind of plan you would have paid out a great deal more in interest payments than if you did not use the plan at all.

Really the best thing to consider about any consolidation loan is to try not to get one. If you can afford it, the best way to reduce outstanding debt is to pay a little more on the principal of as many of your bills as possible each month.

If you still think you need help to eradicate your debt load, locate a reliable debt management service company in your city. Make an appointment to talk to one of their counselors who will help you analyze your specific situation and work with you to arrange a resolution with your creditors. If the counselor thinks that a debt consolidation loan is a good fix for you, then abide by the recommendations and discipline yourself to follow their directions. This by far is the best debt consolidation loan.

The idea of debt consolidation plays to common sense. Why not take out an unsecured debt consolidation loan to lump all your debts into one easy to pay monthly payment? After all it is so hard to face all the various credit card debts, doctor bills, dentist bills, car repair bills, etc. each month that millions of debt-ridden Americans can barely pay the minimum payment. Well therein lies the problem.

The millions of Americans in debt have never been taught how to manage their money. When they became adults, and especially when they married, there was no financial planning owner’s manual in the glove box of life. So, you and I American debtor just continued stumbling along adding more and more credit cards, multiple car loans, and other revolving credit charges to our non-existent budgets. Financial management ignorance is the bane of a huge majority of the American people.

American debt consolidation works this way:

• Look into local credit unions or banks where you currently do not have any business dealings.
• Apply for an unsecured debt consolidation loan that has a low interest rate and a long payment period.
• Once the loan is arranged and you receive the loan proceeds, pay off all your debts.
• Start making monthly payments for a long, long, long time.

Now here is where the problem comes into play. At no time has anyone questioned how you have gotten in way over your head financially. You think that just because all your credit cards have been paid off that you are free to use those cards and any new cards that may come your way, and there will be a bunch of them, too. Now because you have not changed any of your financial lifestyle decisions and practices, you will begin to add more debt to the big debt consolidation plan that you are paying on. You will be in worse shape than before.

The real answer is to not look to any American debt consolidation program as the answer to your debt problem. Instead you should seek out some advice and counsel from reliable debt counseling centers that will able to help you change your financial mismanagement ways. They will help you negotiate credit card debt and will seek ways to create a working budget with your current level of income. That is the answer and that is the only way that you will ever overcome a huge debt problem.