A Debt Reduction Schedule is designed to take all current debt information and project a possible solution for eliminating debt. The solutions generally show significant savings in interest (interest that does not go to the creditor) by following a preplanned schedule instead of merely making the same current payments.

A Consolidation Loan is designed to take all or most of your current debt and combine it into a single new loan.

How does it work? A consolidation loan is presumed to have a lower overall interest rate than the combined existing debts. The lower rate and the single payment make consolidation loans appealing. They result in lower overall payments and less interest paid on the loan. Banks and credit unions typically have lower interest rates than credit cards – sometimes much lower. It is therefore relatively easy to get a new loan from a bank or credit union, payoff the credit cards and save.

But caution! The problem with consolidation loans is they also require a change in behavior and a commitment. Success assumes that you will make the payments on the new loan, put the difference in payments into a savings account and refrain from running up new debt.

Non-profit Credit Counseling Services such as Consumer Credit Counseling Services, Inc. (CCCS) can assist in providing workable solutions for financial problems when you need more structured assistance.

CCCS offers confidential and professional debt counseling to consumers throughout the United States . CCCS has a staff of professional counselors who focus on helping people currently experiencing financial difficulties or who anticipate problems in the future. Most often the program serves as an alternative to bankruptcy. Under these programs, the customer often agrees to turn their paycheck over to the credit counselors who then insure that the payments are made on schedule. This action also shows a "good faith" effort to creditors because the debtor has taken proactive steps to ensure that their debt is repaid.

Whether experiencing hardships or not, you may contact your creditors at anytime to request an interest rate reduction. Normally, if the creditor believes you will take your business elsewhere to get a better rate, they may lower your interest rate, especially if you have been a good customer.

If you are experiencing a hardship, not only can you explain the situation to the creditor and request an interest rate reduction, you can request a period of time where finance charges are suspended on the account. The period is normally six months during which you are not allowed to use the credit card for additional purchases. Some creditors may also reduce your monthly payment during this period as well. Bottom line, creditors want you to repay your debt. They would much rather have lower payments with no finance charge than have you allow your account to go into a collection status or bankruptcy.