If you are wondering if you can consolidate your debts without using a loan, yes that is possible. In fact, there are three ways for you to do so.
The first option is known as debt management. This type of debt relief requires the presence of a debt counselor. With a minimal fee of $50 a month, you can benefit from their expertise, guidance and negotiation skills. You will begin by making a debt management plan that will contain your proposed low monthly payment. Take note that there are no reductions here. You are merely stretching your term so that the longer period will allow you to lower your monthly payments. This plan will be presented by the counselor to your creditor. They will also try to negotiate for a lower interest rate – but that is not a guarantee. When they approve of the plan, you can send the total monthly payment to the debt counselor who will take charge of sending the portions to the creditors – as indicated in your debt management plan. You need to stick to this plan because failing to do so will forfeit the agreement and could return you to your usual high interest contributions.
The other option that you have is balance transfer. This is literally transferring your other credit card balances to a new card. This card has an introductory period that provides you with a zero interest payment plan. This promo usually lasts for a minimum of 6 months to a year. You will pay a balance transfer fee that is a percentage of the amount that you will shift to the new card. It is usually 3% of the debt amount. There is no professional helping out here so you have to be careful. The trick to maximize this debt consolidation option is to put in as much payment as you can into your debt during the promo period. Any amount that you will send will be credited to your principal debt. Using a frugal budget during this period is sometimes the most ideal tool to make it work.
The last option, though usually not associated with debt consolidation is debt settlement. It is only similar because it allows the debtors to create a single payment plan through a debt settlement company. This type of debt relief option targets to reduce the debt of the consumer. The idea is to convince the creditor that you are in a financial crisis so that they will allow you to pay only a percentage of your debt and after you have finished that, the creditor will forgive the rest of what you owe. This is effective but only if you do the negotiations correctly. The creditor will be unwilling at first to give in. But if they do, you can find yourself out of debt in a couple of years.
All of these options have their own pros and cons. Make sure that you do your research to see which one is the best option based on your financial capabilities and the type of debt that you owe. Usually, these three are best for unsecured debts. If the bulk of your problem involves secure loans, you may want to reconsider debt consolidation loan as your debt solution.