Consolidating your debt can be a good idea during these times. Negotiating a loan with the help of a reliable credit counselor and financial institution can often get you a single, low monthly payment with a reasonable fee.
But Consumer Reports says unless you have substantial equity in your home, do not roll your mortgage into the consolidation loan.
"If you consolidate now and your home drops in value, you could end up paying more money than your home is worth," says Consumer Reports in one of its web articles dated July 2008. "And while it's wise to finance your home for 30 years, when you consolidate you'll also be paying off your car or credit-card bills over that time.
"You'll have lower monthly payments, but by stretching them out over a longer time period you'll likely pay more overall."
CR also says if you happen to default on that debt consolidation loan -- and your mortgage is included -- you could lose your house.
Alisha Tillery, "Common Cents" Trainer for the RISE Foundation in Memphis (www.risememphis.org), says if you're considering debt consolidation, trust only credible debt counseling organizations such as the Consumer Credit Counseling Services (www.helpingfamilies.org) and Clear Point Financial Solutions (www.clearpointfinancialsolutions.org).
Tillery says reasonable fees for a legitimate debt consolidation payment plan are about $35-40 a month.