If you are considering debt consolidation, you have a variety of options, many of which do not require collateral. You could get help through a debt management agency or transfer all your debt to a single credit card, such as a zero percent introductory credit card. In addition, some lenders will offer unsecured debt consolidation loans. As a last result, filing for bankruptcy may be an option.
Using a Credit Card
One of the easiest unsecured loans you can get is a loan you give yourself using your credit card. This could be done through a cash advance or a balance transfer. In any case, this option is immediate and, depending on your credit card's terms, may allow you to enjoy a low interest rate. However, if you opt to use this option, your credit card utilization rate (the ratio of your credit card debt to your spending limit) will increase; a high credit utilization rate can lower your credit rating.
Unsecured Debt Consolidation Loans
Alternatively, if you do not want to use a secured loan to consolidate your debt, an unsecured debt consolidation loan may be a good option. This type of loan typically has higher interest and fees than other debt consolidation options, but if you can’t make your payments, at least you don’t risk losing your home or other assets used as collateral, and you don’t hurt your credit the way you can with a high credit utilization score.
Debt Management Agencies
If you are looking for a way to consolidate your debt without taking a secured loan, you could try a debt management agency instead. Many such agencies provide debt management service by paying off your debt and extending you a loan for the balance. Interest rates may be lower than what you are paying now, especially if you have a lot of high-interest debt, like credit cards, but you have to be careful; usually, you have a much longer period of repayment if you go through a debt management agency. Over time, you may end up paying more in interest as a result.
If you are unable to consolidate your debt using credit cards, unsecured debt consolidation loans, or the help of debt management agencies, it may be time to consider bankruptcy. Bankruptcy can mean complete liquidation (Chapter 7 bankruptcy) or it can involve placing your debts on a three- to five-year debt repayment plan (Chapter 13 bankruptcy). In any case, your credit will take a hit, and as a result, so will your ability to access new credit. But it can also mean that some debts are discharged, making it easier for you to get back on your feet.