How to Consolidate Debt

Find out more about debt consolidation and how it works here. We'll explain who makes a good candidate for consolidation and why the process is effective in what follows.

Consolidation Customers

Every debt consolidation service will have different requirements concerning customer eligibility. For specifics on eligibility criteria to consolidate debt, you should always contact your consolidation service. In general, most consolidation agencies require that their customers:

• Have at least $5,000 of debt
• Are not currently enrolled in a debt consolidation program
• Are not more than three months delinquent on payments
• Understand that consolidated credit cards must be canceled

How Consolidation Works

When you consolidate debt, your service bundles multiple, high-interest debts into one payment with more affordable interest rates. Some consolidation services have access to interest rates with certain creditors that the general public cannot obtain. If your service has access to such rates, they will be applied to your account to help make your monthly payment less burdensome. Because your debts are condensed into one package, you will also have just one payment to manage each month. You will send the payment to your consolidation agency, and they will then split the money up among your various creditors. In other words, as long as you pay your consolidation service as agreed, your debts will always get paid on time.

How It Helps

Now that you understand how to consolidate debt, you might wonder how you can benefit from the process. First and foremost, debt consolidation can save you money. You can pay off your debt faster than you could with your current rates and terms, and an expedited repayment plan means substantial interest savings. We've provided a synopsis of the benefits of consolidation below (results will vary):

• Make your debt payments more manageable
• Get out of debt more quickly
• Save money on interest expense over the long run
• Streamline your debts by packaging them all into a single payment
• Create a structured, time-limited repayment plan with your consolidation service for rapid, effective progress

Although debt consolidation companies can help you in many ways, there is no one that can improve your situation more effectively than you. Get some valuable self-help tips now.