People are up to their eyeballs in debt. With interest rates rising, many people are experiencing severe difficulties keeping up with their credit card and home loan obligations. The problem has been fueled, in large part, by the extremely low adjustable rate mortgages which many people took advantage of during the past few years to purchase homes that they could really only afford at those rate levels. Unfortunately, those rates have now increased, which means that the monthly payment obligations have increased substantially.

The result of these events has been devestating for many, and you should not feel isolated or alone if this is your situation. The problem is rampant, and many people are in the same boat looking for ways to weather the storm. Specifically, people are living in houses that they can't really afford. On top of that, the housing market has cooled which means that they can't sell the houses at prices that would allow them to pay off the adjustable rate mortgages. Accordingly, desparate to keep up with their adjustable mortgages as much as possible, people are forced to use other forms of credit to pay for their daily needs, namely credit cards with astronomical interest rates. At the end of the day, most or all available cash goes to the adjustable rate mortgage, which leaves amounts still owed on the mortgage plus additional amounts owed to the credit card companies at much higher rates.

While there are no great options, the best may be for people to attempt to consolidate their debts into one, with the lowest interest rate possible. This maybe a home equity loan, which will typically carry a much lower interest rate than those charged by the credit card companies. Other advantages of home equity loans are that they reduce the number of lenders to whom payments are owed, and the interest paid on the loans will be deductible for tax purposes.

If the home equity loan is not available because there is no equity left in the home, people should look for other single sources of loans with the lowest available interest rates. This will consolidate all debt with one lender at one rate (the lowest available), simplifying the situation for the borrower.

Finally, of course, in the process of consolidating debts with a home equity loan or other form of debt, all efforts should be made to negotiate with your existing lenders to eliminate the debts owed by paying some discounted amount. If, take for example, you owe $100,000, see if you the lender will accept something less, like $50,000, to resolve the debt completely. While no lender wants to do that, they are often willing to negotiate such arrangements simply for the sake of being done with the loan and not incurring any greater losses.