Debt settlement and debt management plans are other options.
Debt settlement is the practice of paying a lump sum to settle a debt for less than what you owe.
Your credit cards, line of credit and other loans get consolidated into a lump sum you can tackle at a lower interest rate and with a minimum payment that’s manageable.
Here are six common debt consolidation mistakes consumers make and how to steer clear of them.
Your credit counselor works with creditors to consolidate the full amount of your loans at a lower interest rate or for a longer repayment period (three to five years usually).
You make your payments to the agency and usually pay a small fee (max a month).
“When I counsel someone, I encourage them to really understand the root issue of what got them there in the first place,” Bossler says.
Consolidation occurs with debts that are greater than ,000, Bossler estimates.