Within the past couple of decades, debt consolidation has become a popular way for many consumers in Wisconsin to get their finances back on track. When you over-extend yourself due to unforeseen circumstances, loss of a job or lack of planning skills, combining all financial obligations into affordable monthly payment may be the most effective venue. Each state has its own laws, but several options are available to alleviate or reduce the debt presently owned.

Implementing an installment loan is suggested for people who carry high balances. This method of monthly payments may benefit one’s credit rating over a long period. The downside may include a temporary dip in FICO scores, but it is still considered the most effective way to clear the present balances and show positive payment history resulting in higher credit scores in the future.

Another technique of bill control is a debt management plan. It should not be confused with debt consolidation as the program offers different approach. The specifics may include establishing a relationship with a credit counseling agency that may require cancelling all credit cards while participating. Credit scores are typically affected by this procedure, but it may be helpful to people who cannot obtain debt consolidation loans.

Many credit card companies offer balance transfer options at low interest rates. The strategy works best for consumers who remain diligent with their payments. There is typically an introductory period attached to these types of offers, and, once it is reached, the interest may be higher than the original bargain. It then becomes important to pay as much of the balance within the introductory period to avoid additional fees. Credit card debt can lead to creditor harassment, higher interest rates and bankruptcy. A seasoned lawyer may be able to help with financial issues and guidance through the legal process.

Source: MSN Money, “Will debt consolidation help or hurt my credit?”, December 27, 2013