By Robert Bell

Good debt vs. bad debt: * Good debt is debt you have on items you need but cant afford to pay for up front without using all of your cash reserves or liquidating your investments. It is debt that can be seen as an investment and can help you build your credit rating if paid on time, such as a mortgage, car payments or student loans. * Bad debt is debt youve taken on for things you dont really need and cant afford. The worst form of bad debt, of course, is credit card debt, since it carries the highest interest rates.

What can be done once debt becomes unmanageable? * Do not continue to borrow if you cant make monthly payments towards the debt. Reserve your credit cards for emergencies. Try not to add to your debt load by making additional or unnecessary purchases. * Do not use your credit card to borrow cash. * Create a budget for income, and a debt payment plan. Do not spend more than you earn. * Use your debit card, not your credit card, to make purchases. * Pay more than the minimum amount due on your credit card(s) every month. * Talk to an authorized account representative at your credit card company as soon as possible about lowering your interest rate and, if possible, arranging a payment schedule. * As soon as a credit card account is completely paid off destroy the card and close the account. * If all else fails, consider using the services of a licensed credit counseling company that might be able to help you pay off your debt.

What is a credit counseling service? * Credit counseling services, also known as debt management or budget planning services, help consumers pay off unmanageable debt. These companies can contact creditors to help arrange lower fees and interest rates (sometimes with better results than a consumer could normally negotiate) and can create a reasonable debt consolidation and/or repayment plan. Who benefits from credit counseling? * Anyone who is behind on bill payments to creditors can consider using a New York State licensed credit counseling service. * Anyone who is considering bankruptcy may also benefit from credit counseling. Declaring bankruptcy is usually the last resort anyone should take to solve financial problems. A bankruptcy petition can stay on your credit report for up to 10 years.

Roberto is the owner of Consolidation Credit Debt. You can find more information at http://consolidation-credit-debt.com

By Brad Stroh

Since there are a variety of online debt consolidation options, including credit counseling, debt negotiation/debt settlement, a debt consolidation loan, and other debt resolution options, it is important to fully understand each option and then pick the solution that is right for you.

Credit Counseling

Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts - but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report… and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy - or using a third party to re-organize your debts.

Debt Settlement

Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money.

Debt Consolidation Loan

Many people think first of a debt consolidation loan when seeking online debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In a debt consolidation loan, you exchange one loan for another. The most frequent form is taking out a mortgage loan, which carries a lower interest rate and is tax deductible, to pay off high interest rate credit card debt. It is important to be aware that shifting unsecured debt to secured debt can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure! In the case of a debt consolidation loan, most mortgages are 30 year loan, which means that the total cost and the time to debt freedom could be very high… but the monthly payment will be lower than other options and there is no credit rating impact.

Net-net: while there are many forms of online debt consolidation, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.

Brad Stroh is currently co-CEO of Freedom Financial Network and http://www.Bills.com. If you would like more of Brads http://www.Bills.com/sitemap/, please visit the Bills.com information on http://www.Bills.com/creditsolutions/.