In 2010 in the US the average citizen was shelling out approximately $8,000 in debt servicing obligations for home loans, car loans, education loans and credit card debt, and in the year 2011 there was a marginal decline in these figures, but overall Americans were outsourcing debt management at higher levels than ever before. Is this justified or is this simply a waste of money and existing income resources?

Initiating debt consolidation on your own

In debt consolidation you hire a professional debt management firm for the sole purpose of negotiating a favorable debt reduction package with your creditors so that you can close as many loans as possible through an accelerated repayment program. Everything depends on how effectively such intermediary companies negotiate loan reductions. If they only reduce loan interest sums marginally and then add on their own administrative expenses, no purpose will be served. It cannot be taken for granted that creditors will heed the advice of debt management firms and that creditors will adhere to the terms hammered out by these intermediaries.

What debt management companies do is to consolidate all your periodical payments and then allocate the credits to various creditors on a periodical basis, something that you are equally competent to handle. Many such agencies make tall promises unsupported by written agreements that again expose you to punitive action from creditors who feel that any time is ripe for a foreclosure or repossession on defaulted payments.

You can calculate your loan liability and the rate at which interest accrues on your loans. You are also free to call up the creditors individually and hammer out a reduced version of the loan for accelerated repayment. When dealing directly with you creditors may feel more inclined to adjust their terms and accommodate a compromise settlement if they are convinced that you will repay.

Free debt management advice is available if you seek it

If debt management companies fall short of expectations in negotiating favorable loan waivers and reductions with creditors, and you still get to pay for their services how are you benefitted? This raises the question why shell out hard earned money for professional advice when such advice is available for free elsewhere. The National Foundation for Credit Counseling (NFCC) that can be contacted at and the are outstanding organizations that impart free counseling for debt burdened consumers. The advantage of approaching these entities is that you get systematic help in organizing your finances, and tools that help you properly budget your income and expenses, and assist you in planning debt elimination with all the resources at your command. This knowledge will help you save thousands of dollars which can be ploughed back into debt servicing.

Success hinges on controlling deviant financial behavior

The only problem with debt consolidation is that the solution should not create more problems for you than the debt itself. Many companies suggest short term loans that are problematic and only serve to exacerbate your financial condition. The best way is to discipline your own financial habits. Overspending and leading a lifestyle not commensurate with your known sources of income can lead to aggravation of the existing debt, and debt management advice by itself will not erase the underlying problems. An honest down to earth approach vis-a-vis the lenders pays better dividends than third party mediation where you may never know what transpires till it is too late or till things go beyond your control.

If you are really keen on debt consolidation this is the way to go about it

You may have heard of the loan for vehicle title. The cash loan for title is approved on the collateral of your car title papers. The car equity loan promises instant cash up to 60% or more of your well maintained car’s built in equity. The auto equity loan interest at 25% APR will safe guard you from falling prey to usurious lenders that purvey payday loans which charge excess of 400% APR for smaller loans. The auto collateral loan will ensure that the loan is repaid conveniently in smaller installments without straining your income.