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In the past years there has been a rising problem with individual debt. The average US household is estimated to have up to $20,000 in non-mortgage debt. Because of these large debts most people are unable to pay off their debts without professional help. Debt relief isn’t something that happens over night, but there are a few ways to help you achieve it. An individual may take out a loan in order to pay off other loans that they already have. The act of taking out a loan to make payments on previous ones is known as debt consolidation. The primary reasons for debt consolidation are to secure a lower interest rate, the convenience of servicing one loan, or to secure a fixed interest rate. Sometimes a company may take advantage of the benefit of refinancing to charge very high fees in the debt consolidation loan. Some unscrupulous companies will purposely wait until an individual has backed themselves into a corner and must refinance in order to consolidate and pay off bills that they are behind on the payments. The individual may lose their house if they do not refinance, therefore they are willing to pay any allowable fee to complete the debt consolidation. This is known as predatory lending. Most debt consolidation transactions do not involve predatory lending. Another way to start your own debt relief is through credit counseling. Credit counseling offers education to consumers on how to avoid incurring debts that cannot be repaid. Credit counseling generally involves negotiating with creditors to establish a debt management plan, or a DMP, for a consumer. DMP’s normally offer reduced fees, interest rates, and payments to the client. A DMP will help the debtor work out a payment plan with the creditor so they may pay off their debt. Unfortunately there are some draw backs to DMP’s and credit counseling. Credit counseling services tend to hire people off the street who have no background in credit counseling until after they get the job. This means that the person who may be helping you only has experience as a credit counselor and no other form of financial management. This is because the training to become a credit counselor is based only on that service and not overall financial management. Some lenders may see on your file that you once participated in a DMP and it may be considered as a risk. The lender may think that as a customer you are unfit to manage your finances thus making it more difficult to get a loan on a car or home. The reasoning for this is that lenders consider the risk factors of a client before determining whether they are worthy of credit. Luckily having a DMP on your file is considered a minor risk. It is much better to have that on your file than bankruptcy. If a lender see’s that you have bankruptcy on your file it is very likely they won’t deem you as credit worthy. Closing Comments Both debt consolidation and credit counseling are good ways to start on the path to debt relief. You can choose to go with debt consolidation and take out a loan to pay off previous loans. As long as you watch out for predatory lending then debt consolidation is a fine choice. You can also get credit counseling and work with your creditors to reduce your payments and start your own debt management plan. Both plans will help lead you to your debt relief.