Debt consolidation for bad credit is something that many people are looking for right now and fortunately you do have a few options for consolidating your debt even if you have bad credit. First and most importantly, bad credit loans are never a good option no matter what you are doing with them. They have high interest rates and many times you are entering into a situation that will not have a good outcome.
Debt settlement and credit counseling are 2 options that do not require you to have good credit, because they are not loaning you money. Credit counseling is a resource that will consolidate all of your unsecured debts, so that only one payment is needed each month. As long as you can make a 2% payment each month, you are pretty much good to go. These companies normally ask for you to set up an electronic withdrawal and they withdraw your payment on the same date each month.
Debt settlement does not really allow you to consolidate your debt, but if you use a service you can make monthly payments to an escrow account and they will pay your lenders off one at a time. This process is a reduction of your credit card balances through a negotiation process with the lender. There are several disadvantages to using a debt settlement service and this method should be used in lieu of filing bankruptcy. Statistics show that less than 10% of all individuals that enroll their accounts with a debt settlement service actually complete the program and the whole process can be quite expensive.
Credit counseling is the best way to begin, if you do not know where to start. They are nonprofit and are not in the business to make money. About 90% of all applicants will go on a debt management plan. They will refer the other 10% to either a debt settlement service or a bankruptcy attorney. This plan works through an interest rate reduction and fee elimination arrangement that is made between the credit counseling company and your lenders. This plan will usually have you out of debt in 3 to 5 years. You do have choices that can help you get out of debt, but the worse choice you can make is no choice.
