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You’ve gotten yourself into some debt problems again. The credit cards are maxed out, your home equity line of credit is at the max (and thanks to the financial issues here in the United States, the bank actually wants some of their money back right now!), and if you are the average American your savings is dwindling faster than ever. That is, if you had any savings to begin with. Considering the national savings rate is negative two percent, you probably didn’t.

What are you to do? You can barely make the minimums on your payments and are starting to truly struggle to get by. For starters, you should probably cut your lifestyle back. Increasing your income is another way to go. Some people may have already tried these things – they’ve cut back to the bone, they’re eating beans and rice online, and maybe they’ve taken a second job to try and bring in some extra cash.

The situation is desperate. What to do?

Well, there’s always debt consolidation. Essentially this is what happens when you use a debt consolidation company. You’ve got five debts at five different interest rates. That means you’ve got five different minimum payments to make each month.

When you consolidate those debts, the company gives you a loan for the full amount. You write five checks to your five creditors for the full amount of what you owe. If you’re smart, you also close all of those accounts so you can’t do it again. You now owe the consolidation company the full amount. Sometimes it will be at a lower interest rate, sometimes not. They usually extend the number of years you have on the loan to stretch out the payments. This lowers your monthly payment overall, but the extension in time usually means you pay more for it. Unfortunately, this is what some people have to do because of the situation they’ve dug themselves into.