It's a nightmare that touches many people's lives: being up to one's eyeballs in debt.

Many people get so far into the hole of debt that they never learn how to get out. However, others attempt to get out debt—via debt consolidation, but don't properly understand or manage the process, and end up driving themselves even further into debt.

The consequences can be life shattering: losing your home, going without health insurance, leaving no inheritance behind, ruining personal and professional relationships, etc. Yet, there are ways in which people can successively climb out of that hole. With proper, professional consultation, debt consolidation is a very effective option available to just about anybody in debt.

Understanding Why You're Here

The most important step in getting out of debt is understanding how you got to where you are.

Facing the reality of your situation might be painful, but it is necessary.

Most people that have heavy debt have been living beyond their means, and therefore there is a larger need to change basic attitudes and ideas in order to really realize the major changes they need.

Not doing so could simply make you continue down the slippery slope of debt right when you thought you were in the clear.

Get Free Consolidation Advice for Your Debt

Get consultation from professionals on your financial situation to help you appreciate the reality of the position you are in; you can do so for free at many non-profit financial consulting firms. A couple of a good sites to start at would be MyDebtConsolidationAdvice or 3DebtConsolidation. You may also want to read our article, "Learn to Change Your Spending Behavior."

Remember, there is an abundance of organizations out there offering completely free consultation services in this regard, so don't pay for it when you've got more important bills!

Pros and Cons of Debt Consolidation

Let it be clear: consolidating debt isn't the right step for every debtor. It is not an ideal situation for everyone with debt problems.

All in all, consolidating one's debt is for those that simply cannot handle paying the high interest rates of various simulatneous loans, do not have the discipline to keep up with several repayment processes, or otherwise cannot sustain the debt situation they currently face.

Avoiding the Myths

• One myth says that a DMP (debt management program) will help your credit rating. If you have a history of late payments that have already affected credit report, a DMP won't hurt you any further. However, if your credit history is good, a DMP will hurt your credit.
• Another persistent myth is that a DMP will save you money. This usually isn't true. The reductions you will see in your monthly payments are simply possible because the remainder has been included back into the original amount owed, and you will pay back over a longer period of time. In the long run, DMP may end up costing you more, although this is still an attractive option for people on tight monthly budgets.
• Also, beware of ads for “super low” interest rates. The market is pretty uniform on this subject, however false advertising is rampant.

Using Debt Consolidation Tools Wisely

• Any financial advisor will tell you that, no matter what tool you're using to consolidate credit card debt, mortgage debt, medical bills, etc., make sure you thoroughly understand it and have read all the fine print. As always, the changing or inclusion of just one or two words in a contract can totally alter the spirit and specifics of an agreement.
• There are other options available such as a home equity loan, taking a loan from your retirement fund, but it is important to consider the consequences of each.
• If you choose to take a loan out on your life insurance, whatever you fail to pay off will be taken from the eventual payouts to family members upon your death. These kinds of consequences must be taken seriously.
• Use credit unions, as they usually offer low interest rates; if you're not a member of one yet, find out your eligibility via a spouse, child, parent, or other family member. You can find nearby credit unions at CreditUnionsOnline.
• Lastly, there is the possibility of taking a loan from a family member or friend; be careful with this one, and make sure everything is put in print. A common problem with this type of loan is that it could potentially ruin a good relationship.