There isn’t just one way to consolidate debts
When someone says the word “auto loan”, everyone knows what that means because it means just one thing – borrowing money to buy a car. However, there are a number of different ways to consolidate debts, some of which could work for you and some that might not.
Get a loan
The first way you could consolidate your debts is to get a loan and pay them off. Let’s suppose you owed $15,000 to four different credit card companies. You could borrow the $15,000 and pay them all off. You would then have just one payment to make a month and it’s almost certain that it would be less than the sum of the four payments you’re making now. This would solve your debt problems – if and this is a big if – if you could borrow the money. Many lenders are reluctant to lend money to people who are already struggling with debt. And if you owe more than $10,000, you would probably have to get a secured loan. The problem with these loans is that you would most likely have to use your home as security, which would put it at risk if you were to ever default on your loan.
Use credit counseling
Credit counseling is kind of in the gray area of debt consolidation. It can’t consolidate your debts as a loan would. But it will “consolidate” them in the sense that you would end up with just one payment.
The way credit counseling works is that you are assigned a counselor who will assess your finances and help you create a plan for paying back your creditors. If all of them approve your plan, you would no longer have to pay them. Instead you would make just one payment a month to the credit-counseling agency, which would then pay your creditors.
You have to be very disciplined
The downside of credit counseling is that you have to be very disciplined as you will be required to give up your credit cards and not take on any new revolving credit until you complete your program, which will probably take five years. You will need to make all of your payments without fail or the agency could cancel your plan and leave you in even worse shape. In other words, you will have to become a very good money manager, which may be difficult because if you were a good money manager, you probably wouldn’t have gotten into trouble in the first place.
Choose debt settlement
When you think of the term debt settlement, you might not think of it as debt consolidation. However, many people have found that debt settlement is the very best way to consolidate debts. Here’s the reason why. With debt settlement, your debts are not only consolidated, they are reduced. For example, Debt Consolidation USA’s debt settlement partners are usually able to save their clients thousands of dollars by negotiating settlements for much less than what they owe. And if you owe less, you should be able to get out of debt much faster.
An affordable payment plan
When you choose debt settlement, you pay nothing until all of your creditors have accepted their settlement offers and you approve your payment plan. For that matter, our debt relief partners offer a simple 100% satisfaction guarantee – that if you are not satisfied with any of the debt relief programs we recommend, you can cancel out and pay nothing.