Debt Consolidation is always a viable option, but be on guard for scammers who will take advantage of you. Lets clearly define debt consolidation.

Debt consolidation is simply taking all your current debt and consolidating them into one loan, your credit score is not affected going forward because you are not asking for a settlement. You have two basic types of debt consolidation, secure and unsecured.

Secure - debt consolidation of this type requires collateral which in most cases is Real Property. Cars, boats, jewelry, 401k loans, life insurance cash value policies could also be used as collateral for a debt consolidation loan. Maybe unconventional, but still an option.

Unsecured - debt consolidation under these terms require a good credit history, sufficient income and possibly a co-signer. You might be asked to close the accounts that you are consolidating.

The success or failure of either debt consolidation programs is in Discipline. If you start charging again on top of the consolidation loan you will have double trouble. If that loan is against your house you could put your house in jeopardy. If you do get approved for a debt consolidation loan before you sign the papers be sure, You know You. Make absolutely sure you can withstand the temptation to charge, if not the results could be disastrous

In most cases you will be taking revolving debt and turning it into a fixed term debt. If your using your home as collateral check with a tax accountant to see if the interest is deductible. This could sway you in deciding which debt consolidation loan to take. Fees should be minimal to none, it's built into the interest rates, the exception could be if you use your home for the debt consolidation loan. In this year 2008 home prices are dropping, equity and loans for consolidation may be scarce, but no harm to ask. Also, don't be afraid to negotiate terms with the lender you are consolidating with, a little haggling could save you a lot of money. Donald Trump said "a good deal is made on the purchase not on the sale" so get all the advantages you can before you sign on the line.

If debt consolidation doesn't work out for you check our Debt Hub for other options. You always want to read the fine print and keep all documentation for any dealings you may enter.

Now you can add a new term to the list of Debt Consolidation, Debt Relief or Debt Settlement, it's Debt Forgiveness.

This normally applies to a home mortgage, but it can fall into the category of Debt Reduction.

These days credit companies know what is happening and are more willing to "negotiate" Debt terms, interest rates and balances. Even though the bankruptcy laws changed a few years ago it only affects which chapter you can file, 7 or 13.

Talking to a few lawyers recently revealed the record number of bankruptcies processed during these times are enormous. That information puts you in a better bargaining position if you wish to "negotiate" your debt.

This opportunity may not have been available if the economy was good. Don't be afraid to try, the worse they can say is no.

I know congress has passed a law for houses, forgiven debt is not taxable, but check to see what it is for credit debt.

Chapter 7 is a total discharge, non taxable event.

Whatever you decide, Consolidate Debt or negotiating your debt, put all terms in writing and document, document, keep documents.