When solving a problem the best course of action is to Consider Your Options. When it comes to unsecured debt, there are several options, some of which are:

There are many non-profit creditors in this country that advertise that they can assist you through debt consolidation by grouping your bills into one payment. Sometimes these companies are referred to as debt consolidation companies, but they do not typically make loans like banks or lenders that offer true debt consolidation. Credit counseling companies contract with your creditors, collect a certain minimum payment from you based upon a variety of factors including income and expenses. You then make one payment to that credit counseling company per month who then disburses this amount to your creditors in accordance with the plan they have set up. Credit counseling companies retain a percentage of what you pay them monthly as their fee. Traditionally, when working with a credit counselor you will pay back the full amount of the debt you owe. The program length and your monthly payment varies according to your income, expenses and other factors, and is dependent upon your ability to pay off your entire debt through their plan.

This program is also known as debt settlement. You will typically pay back a percentage of the debt you owe. You will in most cases be advised to stop making your payments. You will incur creditor phone calls, and increased interest and penalties until such time that the counselor is able to settle your debt. Collectors and creditors may continue to use all legal methods allowable under the law to collect from you. This program is different than debt consolidation. The benefit of this service is that if you complete the program successfully, and depending upon the settlements made on your behalf, you may pay less than you would have paid if you had made the minimum payments under your credit card agreements, or under a credit counseling program.

Bankruptcy is much different than debt consolidation. There are two types of bankruptcy most commonly used by consumers. Chapter 7 or "straight bankruptcy" and Chapter 13 bankruptcy "reorganization". Chapter 7 is when you liquidate all assets and liabilities you owe through the court. Note, there are exemptions to certain assets but each state varies. Under this program, most all of your unsecured debt will be wiped out. Chapter 13 is a repayment plan approved by the court, whereby you will make payments for a duration of time approved by the court on a percentage of your unsecured debt. Note: Please be advised that you should talk to an attorney to understand each and every aspect of bankruptcy or debt consolidation or any other option before proceeding. Nothing in this web site is to be construed as legal advice and you should exercise caution and seek advice before proceeding with bankruptcy.

Debt Consolidation by definition is a bank that grants a loan to pay off your other debts. You then will make one payment to the debt consolidation lender in repayment of the debt consolidation loan. Although many debt consolidation lenders may appear to offer an interest rate that may be more favorable than typical credit cards offer, debt consolidation loans are usually longer in term and therefore a consumer may pay more interest with a debt consolidation loan.