After years of being a single parent and working low-paying jobs, you're stretched to the limit financially when, suddenly, you're laid off.
Your spouse is seriously ill and, between trying to care for the children, your sick spouse and an ailing parent or two, you lose your job.
You're working "off the books" for a carpenter friend, trying to make a few extra dollars when you fall off a ladder, suffering disabling injuries. Your friend the carpenter fades into the woodwork and you learn he didn't carry workers' compensation insuranace.
Suddenly, you're in a crisis. Without a job, without health insurance, without a way to feed your family and pay the mortgage. These common scenarios are typical of situations that occur hundreds of thousands of times each year in our country. For one reason or another, most consumers are up to their necks in debt and all it takes to submerge them completely is a serious illness, injury or job loss.
The stress, fear and panic that accompanies the realization that you are adrift on a sea of debt can't be exaggerated. It is all-consuming.
What to do?
What do you do to stop the calls and harassment from the collectors? File bankruptcy? Re-finance your home? Consolidate? Move to another country?
Debt consolidation, also called debt counseling or credit counseling, sounds good. In theory, the consolidator negotiates lower interest rates and wraps all of your debts into one neat package. You make just one payment per month to the consolidator, who theoretically keeps your creditors at bay.
This sounds good -- but a quick check of our Debt Counseling Section makes it pretty clear that many of these agencies leave a lot to be desired. If you're determined to pay off all your debts and decide to use a consolidator, find a local, non-profit agency to help you. Never hire a firm you find on the Internet or through television advertisements.