Reduce your interest rates and monthly payments
Debt consolidation in action – a case study from Georgia.
This debt consolidation story comes to us from Canton, Georgia. Ken had so much debt to pay off he wondered if he’d ever be able to do it. But with the help of Consolidated Credit his interest rates were reduced to less than 6.5 percent.
He was originally paying over $3,000 a month. But with Consolidated Credit’s debt management program his payments were cut by almost 50 percent. As a result, Ken can get out of debt in less than five years, when it would have taken him more than 16 years to pay off on his own.
Ken saved over $14,000 in total interest charges by consolidating his debt. And he had this to say about his experience: Consolidated Credit entered our lives at a time when I couldn’t see the end of the road. Whenever I call, they’re always so knowledgeable and ready to assist. With your help, my family and I will get through this!
What is debt consolidation?
Debt consolidation is the process of combining multiple debts into a single monthly payment. Instead of worrying about multiple bills to pay off each month, you only have to worry about one.
In most cases, you can only consolidate similar types of debt together. In other words if you have credit cards and student loans to consolidate, they get consolidated separately. You get one plan to pay off your credit cards and another to repay your student loans.
Aside from simplifying your bill payment schedule, consolidation usually focuses on achieving one of two goals (or both):
- You reduce or eliminate interest charges applied to your debt
- You lower the monthly payments so it’s easier to manage the debt
When it comes to credit card consolidation, you usually want to try and accomplish both. However, for things like federal student loan consolidation, interest rates are not based on your credit score. As a result, most consolidation plans focus on making it easier to repay what you owe.
What types of debt can I consolidate?
Unsecured debt is the most common. That includes your credit cards, gas cards, store credit cards and in-store credit lines, and unsecured personal loans. In some cases, you may also be able to consolidate unpaid medical bills and payday loans with your unsecured debts.
Most of the information you see below focuses on unsecured debt consolidation. However, there are two other types of debt that may be consolidated:
- There are several ways of consolidating student loans, whether your loans are private or federal. You can read more in Consolidated Credit’s guide to Student Loan Consolidation.
- It’s also possible to consolidate multiple years of unpaid IRS income taxes in a single repayment plan. This is known as an Installment Agreement (IA). If you owe back taxes, consult with a certified tax professional about this option for consolidation.
Comparing options to consolidate unsecured debt
There are 3 basic options for consolidating unsecured debt like credit cards:
It’s important to note that the first two options offer do-it-yourself consolidation. While people often prefer DIY solutions, make sure to evaluate these options carefully. There are certain increased risks that come with consolidating debt on your own.
Is consolidation the right choice for you?
This is not the only solution you can use to eliminate debt. However, it is one of the best solutions available to lower monthly debt payments and save your credit.
Where do I go to consolidate?
It’s not always necessary to go through a third party to consolidate your debt. For DIY debt consolidation solutions, you simply work with a lender or creditor to get the financing you need for consolidation. However, the management of the plan rests solely with you. Only assisted debt consolidation requires third-party help all the way through the program.
- Consolidation Help Guide: Where to go to start your consolidation plan
- Comparing Companies: How to choose a reputable program provider
Specialized options for consolidation
Debt consolidation can work for more than just credit cards. Other unsecured debts, such as payday loans and medical debts, can be consolidate as well. There is also specialized consolidation for student loan debt and debts held by military Service Members and Veterans. The following articles can help you explore these solutions:
- Consolidate Medical Debt: How to consolidate unpaid medical bills that have passed to collections.
- Payday Loans and Consolidation: It is possible in some cases to consolidate payday loans; learn how.
- Military Consolidaton Guide: Explore specialized debt consolidation options that are only open to Service Members and Veterans.
- Student Loan Consolidation: Learn how to consolidate private and federal student loan debt to accelerate repayment.