Frequently Asked Questions about Consolidating Your Debts

Here are the answers to the most commonly asked questions about how to consolidate your debts.

What is debt consolidation?

Debt consolidation is a service that combines your many, high-interest debts into one lower monthly payment. Debt consolidation can help you reduce your monthly payments, lower your interest rates, and get out of debt faster. When you consolidate your debts, you will make payments to your consolidation service, who will then divvy the payment up among your creditors.

How do I sign up to consolidate debts?

You can sign up to consolidate your debts by filling out our free, online form. Our form is very brief and will ask you only for basic contact information. You should be able to complete it in just a few minutes. Once we have your information, we will match you with a consolidation service that can help you consolidate your debts. The service will be able to give you a free quote and answer any questions you may have about the process. You can then apply to consolidate your debts on the service's website, if you so choose.

How much does it cost to consolidate debts?

Remember to balance the cost of debt consolidation with the money you will save on interest in the long-run. The cost to consolidate your debts will vary depending on your consolidation service. Generally, consolidation services charge a one-time commission that is usually the amount of your first monthly payment. For example, if after you consolidate your debts your new monthly payment is $200, your first month's total payment would be $400 to include commission. You will also pay a $10-$40 monthly administrative fee that will either be a per-creditor fee or a flat fee. Examine how to tackle debt on the next page.

Does debt consolidation negatively impact my credit?

No, debt consolidation does not harm your credit. In fact, in most cases, debt consolidation helps your credit by enabling you to reduce your debt-to-income and balance-to-limit ratios. You will have to cancel the credit cards you include in your consolidation, however. Most consolidation services can arrange it so you can keep at least one credit card for emergencies when you consolidate your debts.