There are many consolidation agencies out there offering their services and promising to solve your debt problems just by joining their programs. There are many companies that do what they promise for a fair price and will help you recover from a bad credit situation. However, if your situation is not so complicated, you can carry out your own debt consolidation process without too many hassles.

If you do not have too many creditors and different types of loans and credit cards, solving your debt problems does not have to be so complicated. You can save the money a debt consolidation company will charge you and solve your financial difficulties by yourself.

Debt Negotiation

The main part of a debt consolidation program is debt negotiation. What you need to do is to contact the lenders and try to speak with someone who has the ability to decide over your debt. This can usually be done with personnel from administrative or legal departments. Customer Service will not help you on this matter; just ask them to put you through to the proper department.

Once you have contacted the lender, you need to make things clear. You have to state that you are unable to repay your debt under the current terms and that you need to have your debt rescheduled under more advantageous terms in order for them to get their money back. Do not mean it as a menace, you need to sound concerned, they need to understand that you want to pay but you can not and that if they are flexible enough they will be able to recover their money without entering long and costly legal processes.

Unless the lender holds a real estate guarantee, chances are that they will tailor a new loan with favorable terms so you can retake your monthly payments without sacrifices. If you are convincing enough you can get all the debt created due to punitive fees and interests eliminated and a new loan reschedule to suit your needs.

Get A Loan For Consolidating

Another thing you can do, either instead or after debt negotiation is to obtain a loan for a considerable amount repayable over a long period of time so you can use the money to cancel outstanding debt and end up with a single monthly payment with a lower interest rate. By doing so you will get the same results as a debt consolidation company handling your payments. You will have a single monthly installment to worry about and you will also save thousands of dollars on interests over the whole life of the loan.

Doing this after debt negotiation is better, since you will already have reduced your debt substantially after debt negotiation. If you add to that reduction the money you save by exchanging your current debt with a single debt consolidation loan, you will really improve your financial situation and you will be able to recover from bad credit within a couple of months.

In order to get approved for such a loan you will need to hold some equity on your home. This kind of loan can only be obtained by applying for a secured loan. A home loan, a cash out refinance loan and a home equity loan are the options suggested by most debt advisors.