Your Debt Choices

Debt Consolidation Services

Debt consolidation is an effective financial strategy for eliminating credit card debt by combining debt into one monthly payment and reducing interest rates. Get free debt consolidation help over the phone or online.

What Is a Debt Consolidation?

Debt consolidation combines high-interest credit card bills into a single monthly payment at a reduced interest rate.

  • Paying less interest saves money and allows you to pay off the debt faster.
  • Debt consolidation is available with or without a loan.

It is an efficient, affordable way to manage credit card debt, either through a debt management plan, a debt consolidation loan or debt settlement program.

Types of Debt Consolidation

There are three forms of debt consolidation programs:

  • Nonprofit debt consolidation
  • Debt consolidation loans
  • Debt settlement

The first two are aimed at consumers who have enough income to handle their debt, but need help organizing a budget and sticking to it.

The third – debt settlement – is used in desperate situations where the debt has reached unmanageable levels.

What to Look For

There are many avenues to eliminating debt through debt consolidation, but there are just as many detours that will compound your problem if you are not paying attention.

Keep your guard up against credit repair scams that promise results that don’t seem possible.

There are plenty of advertisements in this industry that sound too good to be true … and it’s because they are! Don’t fall for them.

Understanding what debt consolidation is.

How Debt Consolidation Works

Credit consolidation companies work by finding an affordable way for consumers to pay off credit card debt and still have enough money to meet the cost of basic necessities like housing, food, clothing and transportation.

The term “credit consolidation companies” covers a lot of ground in the debt-relief industry. They range from giant national banks to tiny nonprofit counseling agencies, with several stops in between and offer many forms of credit card debt relief.

It is easiest to divide credit consolidation companies into two categories:

  • Those who consolidate debt with a loan based on your credit score
  • Those who consolidate debt without a loan and don’t use a credit score at all
  • Banks, credit unions, online lenders and credit card companies fall into the first group. They offer debt consolidation loans or personal loans you repay in monthly installments over a 3-5 year time frame.

Making the right choice for your financial stability.

Which One is Right for Me?

The answer likely depends on your situation. Each program is geared toward a different individual.

Nonprofit debt consolidation works in most cases. There is very little risk, and the program is really designed to be a helping hand. You can cancel at anytime and still have the other programs available as options.

  • When you take out a debt consolidation loan, you are converting your credit card debt into loan debt.
  • That closes the door on the possibility of later enrolling in a nonprofit debt consolidation program.

Debt settlement requires you to be all in. In order for it to work, you have to create bargaining leverage by stopping all payments to your creditors.

Once you go down this road there’s no coming back, but if your debts are already in collections, settlement and bankruptcy might be your only option.

Finding your advantage in your solution choice.

Which is Better, Balance Transfer or Debt Consolidation?

Balance transfer cards that offer 0% interest are the ideal way to pay off credit card debt if you are committed to paying off the balance during the promotional period (anywhere from 6-18 months). However, there are several hurdles to clear before you get one.

First, you must qualify for a balance transfer card, which usually means having a credit score of 700 or higher. Next, there usually is a balance transfer fee of 3% to 5% involved.

That could add hundreds of dollars to the amount owed. Then, if you haven’t paid off the balance when the promotional period ends, the interest rate will jump anywhere from 13% to 25%, maybe even higher.

Finally, if you continue using the credit card to pay for shopping, you may end up owing more than what you started with.

Getting started is quick and simple.

How Do I Get Started?

Contact a nonprofit credit counseling agency like Your Debt Choices to find out which form of debt consolidation best suits your situation. The counselors at nonprofit credit counseling agencies are trained and certified by a national organization to act in the best interests of the consumer.

They help create an affordable monthly budget based on your income and expenses. Based on that budget, they recommend a nonprofit debt consolidation, debt consolidation loan or debt settlement program. The advice is free. The consumer selects the form of consolidation they are most comfortable with.

If you don’t qualify for any of the three, an option could be bankruptcy.

Consolidating debt wont apply to all your debt.

Which Debts Can Be Consolidated?

Credit cards are, by far, the most popular form of debt to consolidate because of the high-interest rate attached to them.

Consolidation works best when the interest rate is reduced and monthly payments are lowered because of it.

It is possible, though not advisable, to include medical bills, rent, utilities, phone bills and other forms of unsecured debt in a consolidation loan, but since none of those typically has an interest rate attached, there is no gain from consolidating them.

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