Ask the Experts: What Kinds of Debts Can I Consolidate?

Understanding why debt consolidation only applies to unsecured debt.

I was interested in your program. I was wondering what kinds of debts you deal with. I have collection, credit card, and some loans. Do you work with all of these? Is there any type of debt you don’t work with?

Ashley M.
Marshall, WI

An expert answer from Gary Herman


The main type of debt that we don’t work with – which is an easier way for me to answer your question – is anything that’s secured, which means if you didn’t make payments, is there something they can turn off or take away.

If you owe money to the electric company, if you don’t pay them they’re going to turn your electricity off. Or if it’s a car payment and you don’t make the payment they’ll take the car away. Those types of debts we can’t work with.

The debts that we work the best with are credit card companies, loans, medical bills, and other kinds of unsecured loans.


Basically debt is split into two groups when it comes to what can and can’t be consolidated using a debt management program – secured and unsecured.

Secured debts mean that you’re getting something in exchange for what you’re paying. So you get a house for a mortgage and a car for your auto loan. By contrast unsecured debt doesn’t have anything that can be taken away if you don’t pay. You borrow the money without collateral – so your credit card company extends a credit line that you use and have to pay back. However, if you fail to pay back what you borrowed, the creditor can’t just come and take any of your property to pay back your debt.

So any type of debt that doesn’t have collateral can usually be consolidated. Even if you haven’t kept up with the payments and the account has been charged off by the original creditor and sent to collections, your credit counseling team may be able to negotiate with the debt collector to have that account included in your debt management program.

Consolidate your debt

This basically means credit cards, store cards, gas cards and unsecured personal loans can be consolidated. Additionally, unpaid medical debts and even some payday loans can be consolidated on a debt management program. Keep in mind that part of the enrollment process for a debt management program involves your credit counseling team calling each creditor to get them to agree to your enrollment and accepting reduced payments at a lower interest rate.

For most major creditors and lending institutions, credit counseling agencies have established relationship with those companies. As a result they know it’s in their best interest to agree to payment schedules arranged through these agencies because they understand they’re going to get their money back instead of facing the risk that the debt will be written off if the borrower declares bankruptcy.

With debt collectors, things are a little different because that particular collector may not have a standing relationship with every credit counseling agency. Getting their signoff requires some negotiation, which is part of the service that certified credit counselors provide. They negotiate on your behalf to ensure companies agree to your enrollment so you can get started on the program and starting working your way out of debt.

A note on student loans: Student loans are considered to be unsecured debt. However, while federal loans can be consolidated, they cannot be consolidated on a debt management program. Instead, you have to use specialized student loan consolidation programs that are specifically designed to address challenges with federal student loan debt.

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"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

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With this amount of debt, you'd pay around $xx.xx on a DMP.

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