Many Americans are in debt, in fact most of them are to varying degrees. And, most want to get out of debt and choose debt consolidation programs as one option to help them reduce their monthly payment and get back on the path to debt repayment. However, despite the fact that many people really do want to consolidate their debt properly they end up going about it in the wrong way and unfortunately end up with worse credit and debt problems than when they started. So, if you are in debt and want to consolidate, then consider the following debt consolidation donts before you choose a route.

Debt Consolidation Dont #1 For Profit Credit Counseling

Most of the credit counselors and debt management companies out there are for profit, meaning they want to make an income off of their services. They claim to help you consolidate your debts and all you have to do is send a monthly payment and they will distribute it to all of your accounts until your bills are completely paid off. However, these companies require a fee for all of their hard work and in addition to this the majority of people do not even qualify for these programs. So, if you want to consolidate your debt you should consider all other options instead of this one.

Debt Consolidation Dont #2 Lower Interest Rates Are Out There

If you are interested in consolidating your debts by finding an ultra low rate interest loan, you will more than likely end up paying a higher interest rate than the average advertised rates out there. The reason for this is that interest rates just dont vary that much, and if you see a company offering super low rates there is something else going on. So, be smart and realize to begin with that most banks and lending institutions have very similar interest rates and dont get tricked into something by falling for false advertising.

Debt Consolidation Dont #3 Reduce Your Payments By Half

There are many debt consolidation agencies out there in the form of credit counselors and debt management firms that claim to reduce your monthly payments by half. This is tricky advertising as these companies are actually able to accomplish something like this a very, very small percentage of the time. More than 99% of the individuals using their services may indeed see a small interest rate change, but a reduction of payments by half is simply a dream of many. Dont go to a consolidation firm hoping for this because you will likely be disappointed, and many times using these services can hurt your credit a little bit as well.

Debt Consolidation Dont #4 Some Debt Management Programs Offer Better Rates

If you are looking for a debt management program that will negotiate your monthly payments lower and think you have found a company to do so then you are being misled. Debt management programs and credit counselors do not negotiate how much you have to pay because you must pay back your debt. They simply help you make payments to each creditor every month and they also work with creditors to work with you on your repayment options, but forgiving debt is not going to happen. Sometimes, these programs will work on debt settlements, but dont fall for this if you really want to save your credit and pay your debt off.

Debt Consolidation Dont #5 Debt Settlement is a Great Option

Many individuals believe they can enter a debt settlement program and simply pay off a fraction of what they owe and get out of debt faster. However, the debt settlement option is the worst way to go because you will severely hurt your credit and end up being the victim yet again. Instead, work on making your payments, talk to your creditors, and try to work out a payment plan beneficial to all parties. If you stay in touch with your creditors they are more likely to work with you than if you never return phone calls or respond to their letters.

Debt Consolidation Dont #6 You Cant Get Out of Debt Alone

Many people believe they cannot consolidate their debt on their own but need third party help. This is not the case at all because you can do it all on your own if you know what to do and what to ask for. First of all, consider getting a home equity loan and consolidating your debts that way or else calling all of your creditors and asking for their reduced interest rates for individuals having tough times. You can reduce your debt on your own, and frequently it is the best way to go, you just have to get out there and do it.

Debt Consolidation Dont #7 Debt Consolidation Saves Money

Sometimes debt consolidation saves you money, and sometimes it does not. You need to sit down with your calculator and the amount of money you have coming in each month as well as going out. Then run the numbers with your debt consolidation options, if you arent saving at least 5-10 % then its not worth the risk.

Many companies on the market today prey on individuals with bad credit or who are overburdened with credit and instead of really helping them are just interested in making money off of them. Be smart and watch out for these types of companies that prey on the indebted. If you are in debt and want to get out dont fall victim to these debt consolidation traps that will end you up in a mountain of debt worse than when you started. Instead, work on paying off your debt and talking to your creditors and before you know it you will be out of debt all on your own. Then, when you are finally out of debt work on staying that way by living within your means instead of beyond them and you will certainly enjoy the freedom of being debt free.