Debt Management Tips for Frenzied Consumers

Contrary to popular belief, the lender doesn't hold all of the power in this equation of debt versus repayment. Yes, you may have borrowed more than you could afford - or maybe unforeseen circumstances stood in your way of paying on time, but you still have the ability to negotiate your debt.

How to Get Out of Debt, Stay Out of Debt and Live Prosperously*:
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(Based on the Proven Principles and Techniques of Debtors Anonymous)

Creditors like consumers who work with them on repaying their loans - even if it's not on the original terms they agreed to. They lose out on millions (if not billions) of dollars every year because they have to chase the money through collection agencies.

They would much prefer to get their loan paid back over time, but get it all than to have to forego a large chunk of the money to a collection agency who grabs their share for harassing you over the coming weeks and months (and sometimes years).

Locking your door, unplugging the phone, and not checking the mailbox won't make the debt go away - it just makes the situation worse. Don't worry if you sometimes encounter a rude creditor who acts as if they're going to come repossess everything if you don't grow a money tree in your back yard immediately!

You have rights as a consumer - even to protect you in the event that you can't repay a debt right away. They're not allowed to harass you, but at the same time, you need to make a good faith effort to do whatever's in your power to negotiate with your lenders and pay back the money that you owe.

Debt consolidation is one of your better options when the mounting bills have become too much for you to handle. When you consolidate your debt, you move all of your multiple loans into one loan, so that you have a single, smaller payment rather than numerous bills that end up costing you more money.

With debt consolidation, you'll often find that the single, combined loan allows you to pay a lower interest rate than you'd have to if you paid some higher-interest credit cards back who are also penalizing you for over-limit fees and late payment fees.

Credit Card & Debt Management:
A Step-By-Step How-To Guide for Organizing Debt & Saving Money on Interest Payments

However, there is a circumstance in which debt consolidation isn't for everyone. If you are addicted to spending and can't control your debt burdens, then you might put yourself at risk for clearing your debt into a single loan, and then racking up more debt in the process.

Let's say you have 20 credit cards - all at a 26% interest rate (they raised it to the max thanks to your late payments that gave them that right). You consolidate your debt into one loan, with a more manageable interest rate of just 12%.

You feel relieved about the debt now, but then you realize all 20 credit cards are empty again - now that they've been consolidated into one loan. You have a large amount of credit available, so what's one more outfit or another lunch where you pick up the tab for your coworkers?

Before you know it, you're in deep trouble again - owing, not only the 20 credit card payment you're accruing, but also the original debt consolidation loan you took out to repair this problem in the first place!

Just make sure you're careful not to get into this predicament if you choose to go with debt consolidation to get the damage under control.