If you want to use debt consolidation loan as a way out of your debt situation, you have to make sure you qualify for it. While it is very tempting to run away from your debts, you need to face the music and own up to the financial mess that you created. This debt relief option is effective but to know if it is the right solution for your problems, here are a couple of things that you may want to look into.
First of all, you have to qualify for a loan that is big enough to cover all, if not most of your debts. The idea is to use the new loan to payoff your other debts so you can enjoy a single payment every month. If you know that you will only qualify for a loan that is enough to pay only 2 or three of your 7 debts, then you may want to consider another solution for your debts.
The second item in your checklist is the interest rate. You want to aim for a lower interest rate than your current because you are after a lower monthly payment. If it ends up to be bigger like payday loans, or something similar, you could end up making your debts worse.
As mentioned, it should decrease your monthly contribution. This happens because you have stretched your payments over a much longer term. If this is not achieved by the loan that you are applying to, then you should opt for a different debt relief program.
The fourth in the checklist is your ability to pay the monthly dues in the next 3 to 5 years. In this debt relief option, your debts are not reduced. It is only restructured so it is easier to pay off. Because of that, you need to secure your payments by creating back up plans. This is more difficult to guarantee which is why you are highly encouraged to set up supplemental income sources. With the ease brought about by the single payments, you should be able to concentrate on growing your income by either taking in more work or setting up a personal business.
These four items in your checklist must be met to ensure that you solve your debt problems. If you want to use this option, be very careful about racking up more debt. Once you have paid off what you owe your credit cards, for instance, you might be tempted to use them again. Never forget that debt consolidation loan is only about restructuring your debts, not paying it off completely. You still have to do that so make sure you do not add to what you owe.
Another part of what you should do is to accept that something has to change in your life. Most of the time, debt is a result of overspending. You had been spending more than what you earn. You need to change this and start living within your means.