The current economic situation, as influenced by the housing correction and the mortgage and lending crisis, has affected some of the debt management options that people seeking to bring their personal finances under control have available to them. While such options as debt consolidation via a home equity loan are not off the table and sometimes can be the best solution, circumstances have changed sufficiently enough that the consumer may be better served by reviewing all options carefully before choosing to borrow against home equity.

One of the primary reasons that consumers consider consolidating such high interest debt as what is owed on credit cards and using a home equity loan to pay that debt off is the difference in interest rates. However, with the adjustment cycle that the housing market is experiencing right now, in many parts of the nation, home values are falling to more realistic, pre-bubble levels. That means that the amount of money able to be borrowed in this fashion may be reduced.

Furthermore, the foreclosure wave, as well as its associated mortgage and lending problems, has left many lenders in tough circumstances, lacking the liquidity they need. This, in turn, has contributed to a tightening in the lending industries, which can make it a bit more difficult for those with less than pristine credit to get loans with terms and conditions that meet their approval.

However, taking out a lower interest loan to pay higher interest debt off is not the only way to deal with high interest obligations, such as credit card debt. Many creditors, particularly during this period of time in which defaults are becoming more common and the fear of default more stressful for lenders, are willing to negotiate when it comes to interest rates. Because getting back the principal of the loan, or at least a good portion of it, is the main focus, creditors may be willing to reduce, and even – in some cases – eliminate interest payments. If this type of negotiation is not something that you feel comfortable with, you can seek credit counseling, and they will do it for you, though it will cost you in terms of fees for the service.

While debt consolidation, either through a home equity loan, a straightforward debt consolidation loan, or some other means of obtaining a lower than your debt to be paid off interest type of loan, does have its advantages, such as simplification of your debt obligation, it may be wise to consider how much that convenience costs you and whether or not it is worth it at this point in your financial life. Many people struggling with debt are pleasantly surprised by how effective simply going over their finances with a fine-tooth comb can be, stripping out wasteful or unnecessary spending and creating a spending plan that allows for debt reduction and keeps spending more in line with income.

Financial writer Mark Barnes offers an excellent plan for reducing credit card debt in an article for Lenders Mark, by making use of a repayment calculator in setting goals and actually achieving them. As he points out, making just the minimum payment is never a good plan. The amount of interest saved by paying even just double a minimum payment is nothing short of incredible. Writing for another website, he goes into detail about a method he calls a Debt-Killing-Factor, describing how it can be used to manage serious credit card debt quite effectively.

If after trying alternative approaches and weighing out available options, a debt consolidation loan, either a straightforward loan for that purpose or one that is taken out against home equity, still seems like the best solution, then take the necessary steps to ensure that the loan opportunity you choose is the best one possible for your particular financial circumstances. Shop around and run the numbers indicated by the terms and conditions. Make sure that you understand every aspect of the loan, and remember, if you borrow against your home you put it at risk. Therefore, you should be as sure as possible that you will be able to meet your repayment schedule and resist the temptation to borrow any more than you need to accomplish your goal of bring debt under control.

With everything going on in the economy as a whole, deciding to get your financial life in order by working to reduce and eliminate debt obligations is a very smart choice. Continue making smart choices by carefully evaluation all of your debt management options and by considering ways of managing debt that do not incur additional debt obligations.