Managing debt in practical and innovative ways is an important part of personal finance.Multiple loans create headaches for you as your attention gets diverted by so many different loans all eating away huge chunks of hard earned cash through high interest rates.Many people remain ignorant of the practical solutions lying unutilized in different shades of debt consolidation like..• Personal unsecured debt consolidation loans.• Secured consolidation loans such as home equity loans, and • Debt management programs.In debt consolidation, the basic idea is to combine all your debts together into one single loan, under a single repayment program with much lower interest so that the omnibus loan becomes easier to manage, and easier to repay.Unsecured (No Collateral) Debt Consolidation Loan.In this method an unsecured personal loan (meaning a loan without collateral) is availed in order to clear multiple debts.An essential prerequisite for this sort of loan is that your credit rating should be strong enough to ensure that you get a suitably lower interest rate.This in turn will have the effect of lowering the loan installments, making it easier on your pay packet.If you happen to fall in this category there are many loan options that banks and financial institutions offer.In this type of loan remember that the banker will be taking a higher risk (loan being unsecured) and therefore, the banker will insist on higher credit scores.This is ideal for clearing unsecured debts like multiple credit card dues outstanding.Home (Property) Equity Loans.Such a loan is different from the unsecured loan in that the home or some other landed asset is marked as collateral for this loan.It becomes easier for the banker to permit lower interest rates unlike credit score linked unsecured loans.But this increases the risk for the borrower because a loan default may mean direct foreclosure.Risking your home for repaying credit card dues is too big a hazard to take on.Preferably this sort of loan should be used if you have multiple lending like car loans and business loans to repay that are more voluminous amount wise, and require softer extended repayment periods at lower rates of interest.Debt Management (Debtor-Creditor) Program.Supposing your credit rating was just about normal with a couple of spots and you are in no mood to risk your home to repay dues, then what would you do? In such a situation one way out is to approach a credit counseling firm comprising of credit experts.These specialists will assess your financial situation, probe your creditors and decide a new debt management program that will put in place the ideal repayment arrangement.All you are required to do is to make a lump sum payment to the agency and they in turn negotiate repayment of the interest and principal directly with the creditors, while factoring in their own fees.Counselors will take you on even if you have bad credit.The credit card balance transfer is a variation of the unsecured debt consolidation aiming to control credit card debt.In such a technique all that you do is transfer the balance outstanding from the highest interest bearing credit cards to a credit card having a lower interest rate.This way multiple high interest bearing balances can be conveniently shifted to lower interest cards thereby saving money that would otherwise be lost in loan buildup.The drawback is that the system operates like a credit card not like a loan and repayments will keep changing, and there is the likelihood of the balances attracting special APR (additional interest) provisions.If you discover that there are no viable options left for considering debt consolidation, the next best thing to consider is debt settlement or debt negotiation.The advantage of this is that you can get hold of an attorney who can negotiate a reduced debt package (sometimes even as low as 50% of what you originally owe your creditors).This is generally expensive and has serious tax implications and can also carry legal baggage, and that leaves you considering Bankruptcy as the final and only viable option.

Debt consolidation is quite helpful in getting your debts eliminated, but you need to make the right choices regarding which debts you would like to consolidate or which company to work with and so on.A lot of people end up in more debt because of the mistakes they make in the process of consolidating their debts.If you are careful and avoid the typical mistakes others make, you may be successful in eliminating your debts with ease.Go through the 4 common mistakes people make and avoid them during debt consolidation..1.Not having a plan. This is very important not just for consolidation but for everything that you do.Consolidation is an important process and you definitely need to have a plan for that.You cannot go ahead if you do not have a plan of action.You cannot afford to be casual with debt consolidation.Most of the times people do not have a plan in hand.When you want to get your bills consolidated, you should have gathered proof of your debts, your recent pay stubs and your recent tax return.Have them all with you before you meet the debt consolidation company.2.Leaving all to the consolidators. No doubt debt consolidation companies are there to help you, but that does not mean that you should leave everything to them.You should know where your money is going and how the plan will proceed, how long it will take to get your loans eliminated, and if there are any hidden fees.You should be clear about these things from the very beginning of the process rather than getting unwanted surprises later.3.Getting all debts consolidated. Not all of your debts may be giving you problems.So, there is no need that you should get all of them consolidated.If you are going for a consolidation loan, you would like to eliminate those debts which have a high rate of interest.There is no point in consolidating those debts that have very low interest and especially since they are not creating any problem for you.So, it is important that you should decide before hand which debts you would like to consolidate.Again, there are also some debts that do not qualify for consolidation.Check them out before you enroll in their program.4.Falling for false promises. Handling too many loans at the same time may be quite stressful.At a time like this, if some company offers quick debt consolidation help, it can be quite tempting.However, you must be careful and never take a hasty decision.Take time to consider the offer and if it sounds too good to be true, avoid taking the offer.Debt consolidation offers may seem very tempting, but you must consider all the aspects before you choose a consolidation program that you would like to go with.It is important that you get involved in the process so that you have a fair idea of what is going on with your money.