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You can also seek to take out a personal, unsecured loan on your own or try to negotiate some sort of arrangement with your creditors. The simplest, and most straightforward way to consolidate your debts is to simply to take out a new loan from your bank or credit union and use that to pay off the various bills you may have.You're then left with one monthly bill to pay rather than several.This not only simplifies the payments, but can also provide real debt relief by reducing those payments as well.A consolidation loan can reduce your monthly debt payments in two ways.There are some situations though, where a HELOC might be a more attractive option.A HELOC sets a certain amount you can borrow, called a line of credit, and you can draw upon at any time and in any amounts you wish.
Of course, this approach requires that you have fairly good credit - if your FICO credit score is in the mid-600s or lower, you may have trouble getting such a loan from a bank or credit union.
This makes them useful for situations where you need money for periodic expenditures, such as home improvement projects, but there's nothing to stop you from simply making a one-time draw to consolidate your debts.
There are a couple reasons you might opt for a HELOC debt-consolidation loan rather than a standard home equity loan.
Generally, anything where you've incurred a debt that needs to be paid off over time - credit card bills, auto loans, medical bills, student loans, etc.
The exception would be your mortgage; if you're having trouble paying that, you need to work that out directly with your lender, perhaps through a loan modification.