There are a few widely believed myths about debt consolidation finance:

1. With bad credit I can’t get a consolidation loan – This just isn’t true. However, with bad credit, the lender will probably want to see the loan secured by an asset like your home or a vehicle. If you have enough equity in your home you should be able to get a home equity loan or refinance and get cash back. You can use this equity to pay off debts. If you have a car with equity, you should be able to refinance the car and get cash back.

2. It’s smart to consolidate ALL my debts into one loan – Most of the time, even if you are approved, it’s not wise to consolidate all debts into one loan. For example, student loans usually have much lower interest rates and much better terms than other kinds of debt. Those are usually best kept separate from the rest of your loans. If you owe a tax debt, sometimes the IRS can set you up on payment plans that are lower interest than a high interest consolidation loan. Although its nice to think of having all debts in one location, it won’t always save you money.

3. Debt consolidation will save me money – Debt consolidation will only save you money if you have an overall lower interest rate and payment plan that enables you to pay off the debt faster. Its good to consult a finance expert to help you run the numbers and make sure your plan is financially sound.

If you have school loan debt and are looking to reduce that debt, there are a few things you can do.

1. Consolidate your educational debt into one low interest, low monthly payment – Sometimes even the company who is providing you with the loan can consolidate the debt for you, themselves.

2. Call the company who holds your educational loan and ask them to defer or temporarily lower your payments until you are more established in your career.

3. Consolidate your educational debt into a secured loan like a house or car loan – This usually isn’t a good idea if you have a low interest rate on your educational debt, which most people do. This would only be a viable option if it saved you money in the long run.