Home equity lines of credit offer another way to consolidate your debt. This can be a gamble though. While you have an opportunity to pay off your debt, should you have financial difficulty later down the line and default on that loan you could lose your house. Make sure that the risk you take with this type of loan is worth the reward. More popular still are credit counseling or debt management agencies. Each month they collect a fee from you, and a service fee for themselves and deal with your creditors on your behalf. While it sounds great, it’s important to note that if they are working to settle debts on your behalf, it can count as a mark on your credit report.

Know what you are getting into prior to jumping in. Worse yet, some of these companies are simply out to scam fees out of debt ridden Americans. Do your homework on any company you are considering hiring, before giving them a penny. Debt consolidation isn’t all bad, however. It can be and has been a viable solution for many people, but before signing your name on the dotted line; you need to be educated on the potential pitfalls that can come with this convenience to ensure you are comfortable.