How to Do Debt Consolidation Without a Lawyer

By Valencia Higuera

  • Overview

    So, you want to consolidate your debts and simplify your finances. With a debt consolidation, you're able to combine all your outstanding balances into one loan. You'll receive a lower interest rate and fixed terms, which can put you on the path toward debt-free living. Some people choose to consolidate with the help of an attorney. However, there are fast ways to consolidate debts on your own.
    • Step 1

      Apply for a balance transfer. Rather than juggle four or five credit cards with varying due dates, payments and interest rates, apply for a credit card with a higher limit, and transfer the balances from all your credit cards onto the new one. People with good credit can typically obtain a balance transfer with zero percent interest for the initial 12 months, which gives them ample time to reduce the balance.
    • Step 2

      Use your home's equity. If you own a home, and the property has substantial equity, consider a home equity loan or line of credit. You can tap into your equity and borrow money to pay off credit cards, personal loans, student loans or auto loans. And because home equity loans generally feature low, fixed rates, you can become completely debt free within 5 to 10 years. But if you default on the equity loan, the lender can foreclose. Borrow only what you need, and submit timely payments.

    • Step 3

      Get a debt consolidation loan. Visit your local bank or credit union, and inquire about debt consolidation loans. If approved, the lender issues a check for a specified amount. In turn, you use the money to pay off your creditors. Apply for a secured debt consolidation loan, and use your vehicle or other valuable piece of property as collateral. If you don't have collateral, apply for an unsecured debt consolidation loan. To qualify, you'll need excellent credit and adequate income. Shop around for the lowest rate on a unsecured debt consolidation loan.
    • Step 4

      Contact a debt consolidation agency. If you don't own a home and you can't qualify for a debt consolidation loan, a debt consolidation agency can help. These agencies aren't banks, and they don't write loans. However, they employ trained debt counselors who'll contact your creditors, and negotiate lower interest rates and a new payment plan. What's more, these agencies manage your debt. You'll submit monthly payments to the agency, and they'll distribute payments to all your creditors.
    • Skill: Moderate
    • Ingredients:
    • Home equity loan
    • Debt consolidation loan
    • Debt consolidation agency
    • Tip: Unsecured debt consolidation loans feature higher interest rates.
    • Tip: Choose a non-profit debt consolidation agency.
    • Tip: One missed or late payment voids the introductory rate on a balance transfer, in which case creditors may charge the maximum rate possible.

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