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Everything You Need to Know About Debt Consolidation Programs

Finding effective strategies for credit card debt management is an important step in the journey to financial independence. This is especially true if you are dealing with high credit card balances or multiple loans. With the right debt consolidation programs in place, you can create an effective strategy to eliminating credit card debt.

debt consolidation programs

What Is The Purpose Of Debt Consolidation Programs

How do debt consolidation programs work?  Typically, with these programs, you take out a single new loan to pay off credit card bills and other personal or student loans. There is a possibility that you may be able to obtain your new loan with a lower interest rate. If you do, you can save some money on interest. With good credit standing, you may even be able to lower your monthly payments by stretching out the terms to give you more time to pay off credit card debt.  This means that debt consolidation programs can help your overall debt management efforts. However, the question is, if these programs are suited for anyone struggling to get rid of debt?

Is This Right for you?

Debt consolidation programs are not a blanket solution for everyone’s debt recovery process. This is why it is advised that you begin such programs with some debt consolidation help from consumer debt counselors. For nonprofit financial counseling services that you can trust with your questions about a debt consolidation program, contact the professionals at American Consumer Credit Counseling (ACCC).

The Different Methods of Debt Consolidation

When most people think of debt consolidation, they think of transferring their balances onto one credit card, getting a second mortgage, or opening a home equity line of credit. All of these can be risky, especially when you owe a lot of money and you’re barely surviving from paycheck to paycheck. If you transfer your balances to one credit card but keep the other credit cards, you can be tempted to use them and sink deeper into debt. If you choose a second mortgage or a home equity line of credit to consolidate debt, you’re at risk of losing your home if you cannot make the monthly payments, because your home is used as collateral.

There’s a better way to consolidate your debt. Talk to a credit counseling agency that can assess your situation and help you develop a solid debt management plan where you can become debt-free and financially secure. You can breathe easier because, with these plans, you’re paying off credit cards without incurring additional debt.

Are Government Debt Consolidation Programs Right For You?

Certain government debt consolidation programs are an excellent option for many people, but not necessarily for everyone. When you’re having difficulty making student loan payments, there are many options available to you. And it’s helpful to talk to a debt consultant who can walk you through different strategies for reducing your debt.  The certified counselors can explain all the ins and outs of government debt consolidation programs, and help you decide which one (if any) is right for you.

The Pros & Cons of the Government Programs

Student loans are the best case for which these programs can become a helpful option. As with any other consolidation plans, you will be able to just write one check each month. This way you will find it easier to keep track of your payments. Additionally, a government debt consolidation plan can lower your monthly student loan payments by increasing the amount of time you have to pay back the loan and giving you access to other repayment options.

If your original student loans have variable interest rates, government debt consolidation programs can convert your debt to a fixed interest rate, providing more predictability and possibly a lower monthly payment.

One of the drawbacks of government debt consolidation programs is that if your previous loans had benefits like rebates, interest rate discounts or forgiveness, you might lose those benefits after consolidating.

How To Get Started With Debt Consolidation Programs

If you are not going the government program route then here’s what you need to do to start the process. First, you need to find the right agency among the many debt relief agencies such services.

Then schedule an appointment to talk about your circumstances. Usually, you’ll have the option to speak with your counselor by phone, online, or by appointment.

Make sure you are not walking into your session empty-handed. Gather all of your unsecured credit card debt statements and any other debt. This includes any money you owe on credit or department store cards, personal loans, collection agencies, and credit lines. Your counselor needs this information to evaluate your situation and to develop a suitable debt management plan.

During your appointment, the credit counselor will talk to you about your current financial situation and its causes. Thereafter they will help you set up a workable budget to manage your money. Then the counselor develops a debt consolidation plan with your creditors. These plans typically reduce account fees, such as finance charges and late or over-limit fees. Also, your monthly payment will often be lower than the total of the separate monthly credit payments that you currently owe.

Benefits of Debt Consolidation Programs

  • Makes paying your bills easier by merging all of your unsecured balances into one monthly payment.
  • You can keep better track of your expenses.
  • It helps you better manage your budget.
  • You are less likely to miss a payment.
  • May benefit from the reduction in the interest rates from each creditor and the overall time to pay the balances in full.

How can ACCC Help Create Your Debt Consolidation Plan?

Are you ready to develop a solid debt consolidation plan? As one of the top consolidated credit counseling agencies in the country. ACCC’s certified counselors will always tirelessly work with you until your problems are resolved

At ACCC, our mission is to help you get control of your finances and find the best way to live without debt. We offer free credit card debt counseling that can provide you with a detailed analysis of your finances and several options for paying off your debt. That may include a recommendation for a debt consolidation program or other types of debt management strategies.

In addition to free credit counseling and help with a debt consolidation program, we offer a range of low-cost services for debt management, bankruptcy counseling, housing counseling, and other financial matters. As a nonprofit organization, we can keep our fees among the lowest in the industry, and we also offer lots of financial resources and educational materials on our website, where you can learn more about managing money to avoid debt.

Speak with a certified counselor at ACCC today to find out what debt consolidation programs are best for you. Call 800-769-3571 today. 

ABOUT AUTHOR / Dilini

Dilini is a Marketing Communications & Programs Associate at ACCC. To anyone, managing finances can be a real challenge! Any tips and tricks to help get through this are great! Dilini will share her experiences, tips, and tricks along the way through the Talking Cents blog. Stay tuned!

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