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What Is a Debt Consolidation Program?

Debt consolidation programs make it easier to eliminate high-interest credit card debt by reducing the interest rate and lowering monthly payments to an affordable level.

The primary goal of debt consolidation programs is to help you eliminate debt and save a little money in the process.

Debt consolidation works when the interest rate and monthly payment on your credit card debt is reduced by combining all your bills into a single payment.

The single, monthly payment was cited in a 2018 U.S. News survey as the top reason for consolidating debt.

Another way to consolidate high-interest debt is to have an agency negotiate a settlement with the card companies for less than what is owed.

As you will discover, there are benefits and drawbacks to each. While negotiating down your debt may seem like a simple and straightforward way to save money, the process is more complicated and consequential than it would first appear.

 

Types of Debt Consolidation Programs

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.

If you’re not sure which option will work in your situation, call a nonprofit credit counseling agency like InCharge Debt Solutions. A certified counselor will go through your income and expenses, then offer free advice on which consolidation program will eliminate your debt.

“Credit Counseling will develop an action plan that is tailored to your exact needs,”Rebecca Steele, Chief Executive Officer for the National Federation of Credit Counseling, said. “When you’re in debt, you need to understand your budget, what it’s going to take to resolve your debts and how you can put fair, affordable payments in place to achieve that goal. That is what credit counselors should do for you.”