If you have been feeling overwhelmed with your Credit card Debt and other mounting bills that arrive each day, you may feel like there is no light at the end of the tunnel. Bankruptcy is something that you want to avoid because you can stand to lose a lot—including many of your assets as well as your long-term buying power.

Debt consolidation is a good choice when it comes to successful debt management, but you need to be wary of scams and companies who are more willing to charge high interest and fees that can actually accumulate onto your debt load. Choosing the right Debt Consolidation plan means meeting with a reputable financial planner who specializes in debt consolidation. They will be able to closely examine your entire financial lifestyle and come up with a concrete plan to help you start chiseling away at your debt rock. Here are a few things to consider when choosing the right plan.

Salvaging your credit

One of the biggest things you need to ask yourself is if consolidating your debt will save your credit. Right now if you have a high debt-to-income ratio, your credit score will suffer tremendously. This may not go away right away unless you are willing to pay off all high interest cards and the bulk of your debt quickly. As you begin to pay off high balances and multiple cards with smaller balances, you will see your credit score go up. With a debt consolidation loan, most of your revolving accounts and credit cards will be paid off and then moved to one larger loan package. This doesn’t mean that the debt has been eliminated and you shouldn’t accumulate more debt during this time. There may be a period of time where your credit score will go up, as your credit cards are reporting zero balances with the same credit limits. This can be enticing to borrow more money because you may be offered zero or virtually no interest rate loans as a draw-in for new lines of credit. This can lead to a spiral effect of debt lockdown and really damage your credit. Once you consolidate—focus on paying that debt off immediately. Double up payments if you can and work on paying off the balance as quickly as possible.

Lower interest rate

In order for a debt consolidation program to really work to your benefit, you need to obtain a low interest rate. Credit card rates are across the board—they vary between 6 and 30 percent with all types of fees and penalties weaved into their terms of service. If you can get a loan with a reasonable interest rate to combine all of your balances, you will see a long-term cost savings. The goal again is to keep your payment affordable, reduce overall debt and strive to pay the entire balance off in a timely manner. If you sit down to crunch numbers, you may realize that your new consolidation loan payment is the same if not a little more than paying all of the minimal payments on your old cards. This may seem like you are not getting ahead or are wasting your time with consolidation. Looking at the fine print, this isn’t true. Consolidation loans are just that—consolidated or bulked into one payment over a shorter period of time.

Length of loan

This is where the true test of savings comes in. The overall length of your new loan is likely shorter and has a fixed-term compared to credit card or revolving accounts which may take decades to pay off. You will have an end date to your loan package and you will know exactly when the entire balance will be paid in full. Some consolidation loans offer a variety of loan payment plans to help meet your financial needs. If you can opt for a bi-monthly or bi-weekly plan, you will see a significant dent in the balance of your loan and you can pay it off a lot quicker than if you were to make monthly payment plans. In some cases even if you have a monthly payment plan in place, you can still pay bi-weekly or pay more down on your principle balance with each payment.

Debt consolidation is a viable alternative to bankruptcy. With some bankruptcy programs, the courts may require you to consolidate your debt—especially if you are in a repayment plan. Consolidating your debt may also help you avoid bankruptcy and allow you to keep your home, RV, vehicle and other assets that would be at risk of repossession should you proceed with bankruptcy proceedings. A qualified debt specialist or financial planner will be able to analyze your existing debt load and credit history to see if you qualify. Saving money and peace of mind will help you regain your financial freedom and credit power.