How to Perform Your Own Debt Consolidation

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By Julie Mayfield
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Be a debt consolidation do-it-yourselfer!

Many borrowers want to consolidate their loans to lower payments, save on interest and simplify their lives. There are many debt consolidation companies that will perform this service for a fee but you can do it yourself. Follow these steps to perform your own debt consolidation.

Difficulty: Easy

Instructions

Step 1

Identify a loan you currently have or could obtain that is at an attractive interest rate. If you've identified a loan you currently have, make sure it has available credit or a line of credit that could be extended.

Examples of this could be:

A credit card with available credit.
An auto loan with a low balance that could be refinanced for more.
A home equity loan or line of credit.
A personal loan.
Step 2

Identify other debt you currently have that you would like to eliminate. This is probably debt with a high interest rate or other unattractive terms.
Step 3

Take any steps necessary to extend the credit lines of the loan you identified in Step 1.
Step 4

Take the steps necessary to access the untapped amount of credit from the loan in Step 1.
Step 5

Apply the proceeds you were able to access in Step 4 to the debt you want eliminate, paying it off if possible. If there are additional proceeds available, apply them to other loans with unattractive rates or terms.
Step 6

This process will, in effect, allow you to perform your own debt consolidation without the help of a third party who may, or may not, have your best interests in mind.

Comments

PJWilliams said

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on 11/30/2008 I was interested in this because I have written about how to avoid debt consolidation scams. This is a good idea. At the same time, you should also call around to see if you can reduce your interest rates or extend your repayment schedule. That is something else debt consolidation services do.