In about one-third of credit card consolidations, within a short period of time, the cards come back out of the wallet, and in no time at all, they're charged back up. Then you're in an even worse position, because you have the credit card debt and the consolidation loan to worry about. You're in a hole that's twice as deep - and twice as steep.
Jean ChatzkyDon't let the fact that you're spending time getting organized result in late fees on your credit card bills.
Jean ChatzkyIf you have even a smidgen of doubt that you'll be able to stay away from racking up additional debt, don't do it.
Jean ChatzkyRolling all of your debts into a single loan is a good idea - in theory. In fact, it can be a great idea.
Jean ChatzkyYou need a clear, legitimate excuse for why you're behind [the bankruptcy], such as a layoff, divorce, or medical emergency. Be prepared to back up the circumstances with supporting documents. Anything you have to substantiate your story - including proof that you have, for instance, been actively looking for a new job - will help.
Jean ChatzkyA consolidation makes sense only if you can lower your overall interest rate. Many people consolidate by taking out a home equity line loan or home equity line of credit (HELOC), refinancing a mortgage, or taking out a personal loan. They then use this cheaper debt to pay off more expensive debt, most frequently credit card loans, but also auto loans, private student loans, or other debt.
Jean Chatzky