Debt has a way of piling up over time, even if you have a sound financial plan in place for maintaining stability. When this happens, you may come to find that your debt is difficult to manage and a challenge to keep up with.

While consolidation isn’t the right solution for every consumer, if your debt has grown out of control it’s a strategy to consider.

There are two basic ways to consolidate debt:

  • Debt consolidation loan: For example, you could secure a personal loan or home equity loan that allows you to bring all your debt under the same roof.
  • Zero percent interest balance transfer credit card: Most balance transfer credit cards have a zero percent introductory APR, which typically lasts 12 to 18 months. This allows you to consolidate your debt without the requirement to pay interest for an extended period of time.

But does it make sense for you?

You understand that there is more than one way to consolidate debt, but that doesn’t necessarily mean it’s the right solution for you. Here are some points that will help you decide if it’s a good idea:

  • You’re no longer able to manage your debt load as you have too many individual debts
  • You have good enough credit to qualify for a bank loan or balance transfer credit card
  • You have enough cash flow that you can make regular payments toward your debt
  • You’re confident in your ability to implement a plan for preventing additional debt in the future

On the flip side, there are times when debt consolidation doesn’t make sense. For example, if you don’t have enough cash flow to make your new payment every month, you’ll slip back into the same cycle.

Consolidation doesn’t eliminate the amount of debt you have, but it does improve your ability to remain organized while reducing your monthly cost.

If debt consolidation doesn’t work for you, bankruptcy may be the next natural step in the process. Rather than consolidate debt, bankruptcy allows you to eliminate or reorganize it.

Regardless of the approach you take, make sure you have a clear idea of what’s best for you and how to protect your legal rights in Tennessee every step of the way.