Debt Consolidation Community: 4 Ways to fight debt - Already helped 237900 members!


How much to save by consolidation
Amount you can pay monthly on your debts.

Is debt consolidation good for you?

Debt consolidation is good for you when you're unable to manage multiple debts and make several payments each month. Debt consolidation program is a popular debt plan to replace your multiple bills with one easy and affordable monthly payment. It helps you pay off debt at your own comfort. Debt consolidation enables debtors to pay less each month and save dollars. Find out the 8 benefits you can take advantage of when you consolidate debt.

5 Ways to pay off debt and establish a solid financial footing

Have a look at the 5 ways to pay off debt and lead a comfortable financial life.

  1. Interest rate arbitration: This is where you obtain a secured loan at a low or favorable interest rate to pay off your existing unsecured debts. It helps you manage debts by reducing your interest rates and monthly payments.
    Interest rate arbitration pros
    • Interest rate reduction
    • Lower monthly payments
    • Gradual increase in the credit score
  2. Debt management: This is where you get debt counseling and advice from debt counselors. They helps you plan your budget, and negotiate with your creditors to lower your interest rates.
    Debt management pros
    • Lower interest rates
    • Elimination of late fees and penalties
    • One easy monthly payment
  3. Debt settlement: In this debt plan, the settlement company/law firm checks your financial health first. Thereafter, they create a trust account for you and negotiate with your creditors/collectors to settle debt.
    Debt settlement pros
    • Lower payoff amount
    • Less interest rate
  4. Chapter 13 bankruptcy: This is where you can discharge your debts within a period of 3-5 years under supervision of the court. Chapter 13 is favorable for those debtors who want to keep their properties, and have a regular source of income. This is also known as wage-earner's plan.
    Chapter 13 bankruptcy pros
    • Interest rates are lowered
    • Principal amount is reduced
    • No need to sell assets and properties for debt repayment
  5. Chapter 7 bankruptcy: This is where your non-exempt assets are sold by the court-appointed trustee. The sale proceeds are used to pay off your debts. You can discharge your debts within a period of 3-4 months.
    Chapter 7 bankruptcy pros
    • Interest rate is reduced
    • Reduced outstanding balance
    However, your credit score will drop by 200-250 points and it'll take some time to rebuild your damaged credit.

Debt consolidation - How it works

Here's an example of how consolidation works:

Suppose you have accumulated debt on 2 credit cards, as well as medical bills and a personal loan. The details of these accounts are:


Outstanding balance on credit card X (15%) - $15000
Outstanding balance on credit card Y (20%) - $12000
Amount you owe on medical bills (13%) - $13000


So, the average interest rate = (15% + 20% + 13%)/3 = 16%


After you enroll in a consolidation program, the interest rates on your debts are negotiated down to:

Credit card X - 10%
Credit card Y - 16%
Medical bill - 10%

So, the average interest rate = (10% + 16% + 10%)/3 = 12%


Now if your total debt amount is $40000, you'll save = (16% - 12%) * 40000 = $1600 per year

Debt consolidation solutions for people with various debt problems

  1. People who are going through payday loan hell
    Payday loan consolidation: An option for those debtors who are unable to get out of payday loan cycle. The payday loan consolidation companies offer debt assistance to people going through payday loan hell. They give effective debt advice to the consumers and help them to consolidate their payday loans into a low single monthly payment.
  2. People who are going through credit card debt problems
    Credit card consolidation: It helps you in consolidating your debt into one easy monthly payment. The debt consultants of America co-ordinate with your creditors and convince them to allow you pay credit card bills in small monthly installments. If you're in military service, you may enroll into a military debt consolidation program to get rid of credit card debt.
  3. People who want to lead a Christian life by getting rid of debts
    Christian debt consolidation: It works just like a conventional debt consolidation program and is based upon the Biblical principles. This program helps Christians to free themselves from the bondage of debt, so that they can worship God whole-heartedly. The Christians can use debt consolidation services to eliminate debts and give their full attention to God.
  4. People who often miss bill payments
    Bill consolidation: This is where the interest rates on credit card bills, hospital bills or store card bills are reduced, and the late fees and penalties are eliminated. You can pay off your delinquent bills through small monthly payments and save dollars.
  5. People who are unable to manage unsecured debts
    Debt consolidation loans: You can take out a secured or unsecured debt consolidation loan to pay off your multiple bills at once. After the consolidation of debt with this new big loan, you'll have to make an easy monthly payment to the lender. This is also referred as loan consolidation. If you have poor credit score, then you may go for bad credit debt consolidation loans.
  6. People who want to pay nominal fee while consolidating debts
    Debt consolidation non profit: This program/debt service is offered by a company that has received non-profit status from the IRS. However, keep in mind that this is not a free debt consolidation program. The non-profit debt consolidation companies charge a nominal fee for helping you in paying off debt.

Debt consolidation statistics

Debt consolidation statistics show that consumers can save as high as 90 percent, on their existing debts provided they follow basic 7 financial principles:

  1. Send regular payments to the debt consolidators.
  2. Spend as per their financial means.
  3. Make timely payments on other accounts.
  4. Avoid opening multiple accounts at the same time.
  5. Avoid spending unnecessarilty.
  6. Stay away from new debts.
  7. Stay within their budget.

The debt consolidation success rate will be high when the consolidators can:

  • Review your financial condition accurately.
  • Negotiate with the creditors/collectors competently.
  • Persuade creditors to reduce your interest rates.
  • Set up a suitable repayment plan.
  • Send monthly agreed amount to the creditors/collectors.

Finally, keep in mind that online debt consolidation will not help you pay debt off within a few days or weeks. You haven't incurred debt in a single day. So, it is unfair to assume that you'll be able to get out of the debt cycle within a few days.

Our community offers 8 tools to fight with debt

Check out the 8 tools you can use to resolve your debt issues.

  • USA debt relief companies: You can check out the company credentials and start working with a reputable settlement or consolidation or management firm to pay off debt.
  • Comparison chart: Compare various debt relief options like debt consolidation vs settlement and debt consolidation loan vs program before reaching any decision.
  • 32 Sample letters: You'll need to communicate with your creditors/collection agencies (CAs) in writing at various points of time. You can print and fax letters to the creditors/CAs/credit bureaus while negotiating, validating and disputing debts.
  • Forums: This is a platform to share your financial problems and get free debt advice from the community members.
  • DebtCC answers: This is where you can ask any financial questions to experts. They can give you useful advice on debt consolidation, management, settlement, etc.
  • Free debt calculators: These are smart financial tools that help you compute your debt amount and figure out the amount you can save through various debt plans.
  • Earn dollars: Check out the 8 easy ways to earn dollars and use them in paying off debt.
  • Get rewards: The community offers various rewards ("Hall of Fame", "Debt Samaritan", "Moderator") to members for their active participation.

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* Disclosures:
  • By signing up for counseling session, your provided details (Name, Email ID and Phone No.) will be forwarded to the company advertising on the DebtCC. However, you have no obligation to use their services.
  • Some creditors and collection agencies refuse to lower the pay off amount, interest rate, and fees owed by the consumer.
  • Creditors/collection agencies can make collection calls and file lawsuits against the consumers represented by the debt relief companies.
  • Debt relief services may have a negative impact on the consumer's creditworthiness and his overall debt amount may increase due to the accumulation of extra fees.
  • The amount which the consumer saves with the use of debt relief services can be regarded as taxable income.
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