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OK, so you’ve accrued enough debt that it’s starting to become a big concern. Maybe you find yourself distracted by thoughts about debt at random moments throughout your day, or you’re worrying about it while trying to fall asleep. Maybe you even feel like you’re drowning in credit card debt, and it’s keeping you from any sleep at all! Don’t fret, help is available. One common route people take to get out of debt is known as debt consolidation. It’s a solid option, but there are some drawbacks. Perhaps more importantly, there are other, less well-known options that may be better for you.

First off, what exactly is debt consolidation?

Debt consolidation basically means taking out a loan to cover your outstanding debts. Through this process, you can combine multiple debt sources, such as credit card balances, student loans, or other liabilities, and convert them into a single amount. Think of it as reorganizing your debt. 

What are the benefits of debt consolidation?

The main positive is that it streamlines your monthly payments. After debt consolidation, you’ll make a single monthly payment to a single lender instead of trying to juggle several monthly payments. However, it’s important to note that your original debt still exists and has not decreased; it’s simply been restructured into one monthly loan payment.

Another benefit to debt consolidation is that if you have good credit, you could qualify for a lower interest rate on this new loan than the interest rate tied to your previous debts. This means that a larger percentage of your monthly loan payment would go toward paying off your principal debt amount versus interest, which could help you make progress faster.

Sounds good. So, what are the drawbacks?

There are a number of downsides to consider before choosing this option. Debt consolidation loans can be risky and hard to get. Securing a debt consolidation loan usually requires a high credit score, and defaulting on the loan could cause severe and long-lasting damage to your credit score. As mentioned above, debt consolidation does not mean you’re reducing what you’re required to pay back or “getting a deal.” It simply means your current monthly payments to various creditors have been consolidated into a single payment.

OK, are there any other options?

Debt can come in many forms, including credit card debt, medical debt, mortgage payments, personal loans, auto loans, income tax debt, and student loans. If you’re overwhelmed by keeping up with several monthly payments, debt consolidation could be a good option, but depending on your situation, there could be more advantageous debt relief solutions available. Debt settlement, for example, offers the convenience of a single monthly payment—just like you’ll get with debt consolidation—but debt settlement also reduces the dollar amount of your outstanding debts. So, unlike with debt consolidation, debt settlement allows you to become debt-free by reducing the amount you owe—often by up to half or more.

How does debt settlement work?

We understand that multiple monthly payments, high credit card balances, and substantial loan debt can weigh heavily on the mind. In fact, it may be that the only thing more stressful than all of that debt is the idea of approaching all of your creditors and having to ask for a break. Think of all that time waiting on the phone, listening to bad jazz, waiting for someone to pick up.

That’s where we come in. At CreditAssociates, we can help you achieve the financial freedom you deserve. We’ve helped thousands of people just like you become debt-free by negotiating with creditors to settle your debts while paying less than what you owe. We do this all day, every day, and we’ve gotten very good at it. We love helping people Live Better, Debt Free™. In fact, that’s our mission statement. And we’d be happy to do it for you. We have years of experience dealing with creditors, and we know how to navigate these negotiations efficiently and effectively to help save you time and money.

The best part? It’s easy to get started. Call 1-800-983-6693, or click here to learn more and get your free, personalized debt assessment. With just one phone call you can be equipped with a customized plan detailing your road to financial freedom. 

A Few More Common Questions About Debt Consolidation and Debt Settlement

Will debt consolidation hurt my credit?

The answer is somewhat complicated. Consolidating your credit will mean taking out a new personal loan (again, the idea is that you take out a loan to pay off all of your debtors, consolidating your debt with a single lender). And whenever you take out a new loan, your credit score may take a hit. Furthermore, if you fail to make any payments on the new loan, your credit score will suffer.

One important factor to note: Talking with a certified debt professional—including a free consultation with CreditAssociates—will not hurt your credit. 

Is debt settlement a scam?

While scammers do exist, there are also a lot of companies—like CreditAssociates—who earn their fees fairly and honestly, by helping everyday people become debt-free. One important clue: Honest debt-relief companies will always offer a free consultation and won’t charge you any upfront fees.

And, of course, it’s important to do your research! If you’re concerned about the integrity of a potential company, it’s always a good idea to check consumer reviews. CreditAssociates has an average consumer rating of 4.9 out of 5 stars on Trustpilot, is a member of the American Fair Credit Council, and has an A+ rating from the Better Business Bureau. If you have any questions about CreditAssociates’ reliability, please don’t hesitate to contact us

Which is better, consolidating my debt or keeping it as it is? 

Everyone’s debt situation is different, but it’s likely that consolidation would be more beneficial than doing nothing at all— that is if you meet the requirements needed to qualify for a consolidation loan (the No. 1 qualifier being good credit). With that being said, as we mentioned above, debt settlement offers the same benefits as debt consolidation, while also reducing the amount that you’re required to pay back.