Debt Consolidation Loans vs Debt Management through Credit Counseling

Credit counseling offers another way to consolidate

Luckily, debt consolidation loans aren’t the only way to consolidate debt. There’s another solution called a debt management program (DMP).

• Like a loan, it rolls all your debts into one affordable monthly payment at the lowest interest rate possible.
• Unlike a loan, you don’t need good credit to qualify for those low rates. And it’s designed to help you achieve real financial stability because it comes with the added benefit of professional support.

You enroll in a DMP through a nonprofit consumer credit counseling service. These organizations exist to assist consumers in getting out of debt. They offer free debt and budget evaluations and advise people on the best way to get out of debt.

If someone can’t get out of debt on their own (i.e. with a loan), but isn’t to the point of filing for bankruptcy, the credit counseling agency offers a happy medium with a DMP.

Instead of qualifying for low-interest rates based on your credit, the agency works with your creditors to reduce or eliminate interest charges. You don’t take out a new loan – you still owe your original creditors. But because you’re going through credit counseling, they agree to minimize your rates.

Here’s a snapshot of how a DMP compares to a traditional debt consolidation loan:

No obligation, no upfront costs, no bias

Since credit counseling agencies are nonprofit organizations, they are required to operate with a consumer’s best interest at heart.

In other words, they can’t recommend a debt management program unless it’s the best solution to use in each financial situation. If there’s a better option available, they must tell you what it is, be it a consolidation loan, debt settlement, or bankruptcy.

This means you can get a free evaluation from a certified credit counselor without any strings attached. It’s the easiest way to get an expert opinion on your best option for getting out of debt. You have a clear answer, instead of guessing or hoping that you’re making the right choice.

The benefit of professional support

Another advantage that credit counseling offers is that it provides financial education and coaching as you get out of debt. The credit counseling team helps you create a budget, that includes money for saving, so you can start building an emergency fund.

The team also can help you define your financial goals and set action plans for achieving them. You have access to free resources that teach you how to attain good credit or plan for major life events.

This helps solve those underlying challenges you’re facing that caused you to get into debt in the first place. You address the root causes of your debt, so you can move forward and achieve long-term stability.

We’ve been helping people consolidate debt for nearly three decades

Consolidated Credit is one of the nation’s largest nonprofit credit counseling agencies. Since 1993, we’ve provided free credit counseling to over 10 million people. We’ve also helped people consolidate over $9.75 billion in unsecured debt.