Finding the right debt relief solution is not always a one-size-fits-all proposition, and households should always consider their own unique circumstances when determining the right tool to lower outstanding debt.
There is a way out of loan and credit card debt that doesn't include bankruptcy or sky high interest.
Consult the top choices for debt consolidation and relief companies that will help you climb out of debt.
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Freedom Debt Relief
Online client dashboard
Accredited Debt Relief
Over 20 years experience
Free credit scoring
Over 150 lenders globally
No obligation quotes
Free savings estimate
Online debt analysis
Fast Track Debt Relief
As much as 40% settled
Access Debt Relief
Medical, tax and student loans included
Debt consolidation is the process of consolidating multiple debts into one loan with one monthly payment, replacing your old creditors with a new creditor. The idea behind debt consolidation is that you pay off your debts with a lower interest rate and lower monthly payments, saving money in the process. Any type of consumer debt can be consolidated, including credit card balances, student loans, and medical bills.
Debt consolidation involves taking a secured or unsecured personal loan with a fixed term and a fixed interest rate. Let’s say you’ve racked up debts on three credit cards and are finding it impossible to keep up with the monthly payments. With a debt consolidation loan: you transfer the debts to a lender; the lender pays off those debts; you repay the lender.
A debt consolidation loan works just like any other personal loan in that you repay your lender in monthly installments consisting of principal and interest. All the qualifying requirements that usually apply to personal loans apply in the case of debt consolidation loans. For example, your lender will run a credit check when deciding whether to approve you and at what interest rate.
Personal loans are the most common way of consolidating debt. An alternative method is to transfer your debt into a low-introductory period credit card. Some credit cards offer an interest-free or low-interest introductory period (usually around 12 months). This is only really a good option if you judge that you’ll be able to pay off the credit card quickly.
Freedom Debt Relief is one of the largest debt settlement providers in the United States. In the last 10 years it has helped settle more than $6 billion in unsecured debt. Freedom always keeps you in the loop with an online dashboard that shows you the progress of negotiations and repayments. Being such a large agency has its benefits, with some customers saving 35-70% (after fees).
For over a decade, ClearOne has helped people work their way out of debt - without any upfront costs or consultation fees. The company uses a staff of veteran financial services professionals who know the tricks of the trade, and can stand behind a 100% service guarantee. The company focuses exclusively on settlement negotiation, and for customers dealing with debt of $10,000 or higher. Through the company’s 4 stage program, most customers are able to complete the debt settlement process within 24 to 36 months.
Accredited Debt Relief offers a range of debt relief options. It offers a free consultation to all new customers, where a dedicated counselor goes over all the customer’s needs and forms a debt relief plan. Accredited’s expert negotiators handle debt settlements, and it also works with other parties who can help customers with things like debt consolidation and debt management.
Searching for a debt consolidation company isn’t that much different to searching for any other consumer finance product. The golden rule with anything in consumer finance is to compare at least three to five providers. Before choosing a debt consolidation company, think about how long you’re prepared to spend repaying your debt and what your credit history looks like.
Here are some of the main things to look for when comparing debt consolidation companies:
Debt consolidation and debt management are similar in one major respect: both involve consolidating your debts into one monthly payment. But where debt consolidation involves paying a new creditor, debt management involves paying a debt counseling agency.
The first step to debt management is meeting with a debt counselor, also sometimes referred to as a credit counselor. The counselor negotiates with your creditors, which can sometimes lead to a lower interest rate and lower monthly payments. You pay your debt counselor, who transfer the money to your creditors.
Most debt management plans take three to five years to complete. Debt management is more restrictive than debt consolidation. With debt management, you’re usually prevented from borrowing more money until you’ve paid back all your debts. With debt consolidation, there aren’t really any restrictions – and you’re free to keep borrowing.
Which option is best for you? As a general rule, debt consolidation should be your first option. You should only consider debt management if your debt is out of control. If you have a small amount of debt and a decent credit score, then a debt consolidation loan is a viable option. If your debt is through the roof or your credit is poor, then debt consolidation mightn’t be an option. In that case, you should start thinking about debt management or other types of debt relief such as debt settlement.
Debt consolidation offers a number of advantages. You can consolidate any type of consumer debt. You may be able to qualify for a lower interest rate than the one attached to your current debts, which can save you money in the long run. And best of all, debt consolidation requires only one monthly payment, which is easier to manage than multiple payments.