With the increased costs of energy, fuel and food, more and more homeowners are finding themselves in financial difficulty having to cope with these rising prices as well as higher payments on their mortgages because of higher interest rates charged by lenders. In addition, the financial burden caused by the increased prices is also causing more and more businesses to downsize or close their doors permanently, which means that there are more and more people out of work.

One of the ways that anyone faced with mounting debt and reduced income can cope with the stress of being able to find the monies necessary to pay their bills is to look at debt consolidation. This is the process of combining all your loans into a new loan so that you have only one payment. However, you have to make sure that the payment on the new loan is lower than the combined payments you are currently paying so that you have more money left over to pay for your energy, fuel and food bills.

There are many debt consolidation companies that offer to wipe out your debt. While they often do provide you with good advice as to how you can manage your debt, they are not lenders and therefore cannot provide you with a debt consolidation loan. They can help you in contacting your creditors and ask them to accept lower payments until your financial situation improves.

In order to obtain a debt consolidation loan, you do have to contact a lender. If you have a good credit rating and you do have a source of income, the lender will work with you to come up with a solution to suit your individual needs. If you have some equity built up in your home, which is the difference between what your home is worth and how much you owe on your mortgage, you can obtain a home equity loan or a line of credit. If, however, you have a poor credit rating, which is why you are probably in the financial fix, you will still be able to get a debt consolidation loan, but at a higher rate of interest. The difficulty with obtaining this type of loan comes when you are out of work and do not have any source of income. Lenders are less likely to approve a loan when you cannot prove that you have the means of repaying the money you borrow.

If you are working and still have the same income, you can consolidate your debts by transferring the balances to a zero % credit card. This will work if you can have the bu8lk of the balance paid off before the introductory period expires. After that time, the interest rate goes back to the usually higher one charged by the company and this could mean your monthly payment is not enough to even pay off the interest.

Before you sign for any type of loan to consolidate your debt, it would be helpful to engage in debt management counseling so that when you do get your finances under control, you will be able to manage them better.