#How to Consolidate Debt With Bad Credit

You're up to your eyeballs in debt and your credit is shot. The layoff you experienced a few months ago has taken a toll. You've been searching diligently for work, but in this poor job market, it hasn't been easy. Stop! Before you consider filing for Chapter 7 bankruptcy or enrolling in a bogus debt management plan, consider these alternatives. Seize control of your credit again! With a little planning, patience and persistence, you will be back on top again.

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Tell yourself that it can be done, and you will overcome your current financial situation. Start out with a positive outlook. Be determined to become debt-free, repair your credit and get on with your life.

Understand that getting out of debt is a process, one that will take time. Remember, you didn't get into this mess overnight, and you certainly won't get out of it that quickly. Be mentally prepared to keep track of your monthly expenses, and maintain a tight budget. Learn to live frugally. You don't have to buy everything name-brand.

Take a good, long look at your current financial situation. Determine if you truly need to seek the services of a credit counseling or debt management service. There are plenty of these so-called providers out there waiting around like vultures to make empty promises and take your money. Invest the time to shop around and do plenty of research before deciding which one to use. Realize that, despite what these companies insist, there are other options.

Assemble your current and past-due bills. If you receive unemployment benefits, this will help because some (although very few) lenders actually consider it income. The first thing you should do is call each creditor and try to reach a settlement with them directly. Explain that you've been laid off but still wish to pay your bills. Ask if they are willing to work out a revised payment schedule and offer to pay a lesser amount than normal until you find a job. You'll be surprised at how anxious they are to work with you. Contrary to popular belief, they are not your enemy.

Consider consulting with a credit union or bank, preferably one that you already have an account with, to see if they are willing to approve you for at least a small personal or signature loan so that you can get you caught up on some of your monthly payments. Some of them may even approve you for a debt consolidation loan and make a check out to each individual creditor, if you qualify. All of this will be depend on your overall FICO credit score.

Check into applying for financial aid if you attend college. Not only will it help pay for tuition and books, it can also be used to pay some of your debts. You may qualify for several types of aid, including grants (which don't have to be repaid), scholarships and/or loans. Some loans, such as the Federal Perkins Loan, are backed by the Government, so your credit will not be checked. Contact your school's Financial Aid Office for more information.

Use a consumer credit counseling service if none of the above suggestions work. Exercise extreme caution, and check the websites for the Better Business Bureau and the Federal Trade Commission to see if any complaints have been filed against the company you're considering. Many of these companies claim to be non-profit, but still may charge a monthly service fee if you decide to enroll in their debt consolidation or debt management program.

Examine your entire financial situation, and decide what works best for you. Whichever option you choose, be consistent in making your monthly payments. The sooner you pay off these debts, the better your credit will look and the less stressed you'll be.