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Credit Consolidation Services

Credit Consolidation Services
Betsalel Cohen
UpdatedApr 18, 2024
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    5 min read
Key Takeaways:
  • The debt avalanche is a true, free debt consolidation strategy.
  • Credit counseling will help you budget your household expenses.
  • Debt settlement and refinances can help you consolidate debt, too.

Put Some Distance Between You and Your Debts

Tired of running to keep ahead of your debt? You might be looking for free credit consolidation services to help put some distance between you and your bills.

Dealing with your debt problem is a great idea! One problem with this plan, though — no free or government-sponsored debt consolidation services exist. You may be thinking, "But what about all of those non-profit credit counseling agencies I hear about?" Good question.

We usually think of non-profit organizations as being charities like Goodwill or The Salvation Army, or cultural institutions like NPR or public libraries. Non-profit is an IRS designation granted to an organization that does not distribute its profits to owners as profits or dividends. A non-profit's staff and managers may be paid, and in the case of non-profit credit counseling companies, the executives for some were paid so handsomely the IRS withdrew their non-profit statuses. (See the article The Facts About Non-Profit Credit Counseling for a look at executive compensation at non-profit credit counseling firms.)

If you are looking for someone to help you consolidate your credit card or other consumer bills for free, you are in luck. That someone is you! Let’s look at your free credit consolidation options. We will also look at your non-free options, which you should consider because they may save you more than the fees they charge.

Free Credit Consolidation Programs - Jump Aboard

Debt Consolidation Loans

A popular debt consolidation loan is a mortgage refinance. If you are one of many people in the US who owns your home outright, or own a a home with substantial equity, a home equity loan or home loan refinance can help your consolidate your debts. Another option is a vehicle refinance. This option is available to people who own a high-value vehicle outright or with a large amount of equity.

The big advantage of home or vehicle refinancing the the low out-of-pocket cost and interest rates on these types of loans. The big disadvantage to refinancing or home equity loans is the risk you face if you cannot afford to make the payments in the future. If you cannot pay your home equity loan, for example, you risk a foreclosure and losing your home. If you cannot pay your vehicle refinance, you will lose your vehicle to repossession.

Debt Avalanche

The debt avalanche is the ultimate do-it-yourself free debt consolidation strategy. It costs you nothing, and gets you to debt freedom at the lowest cost of interest. Stretch out, gather your credit card and other monthly statements, and let's begin.

First, order your accounts from highest interest cost to lowest. Second, set the account with the highest interest cost aside for a moment. Third, make minimum payments on the remaining accounts. Fourth, whatever you have remaining in your budget, pay towards your highest-interest account. Fifth, repeat steps one through four next month, and the month after that until all of your debts are paid.

Give the debt avalanche a try for a few months and chart your progress. Watch your spending so you do not backslide. If the debt avalanche is not working for you, consider training with a partner.

Quick Tip

Get a no-cost, no obligation analysis of your debt options from a debt relief provider.

Your Non-Free Options

Your non-free credit consolidation choices are credit counseling — yes, we mentioned credit counseling earlier — and debt settlement. These consolidation choices take different approaches to running your debts into the ground. Let's talk about credit counseling first.

Credit counseling starts with an hour or longer one-on-one training session with you and a counselor. Both of you will go over your budget, and discuss where you can save money. (For a free preview of this type of discussion, check out the Savings Machine.) After your meeting, the credit counselor will call your creditors and set up a monthly amount it will send each creditor.

What about the cost? Here's where credit counseling becomes an uphill run. First, add up the total balances of the debts you would like to enroll in a credit counseling debt management plan. Multiply that by .03. That will be approximately your monthly cost each month for the next 5 years. Enrollment fees range from $25 to $75 per month depending on your state of residence. Monthly fees vary, but should not cost more than $50.

Debt settlement is a much more intense form of debt reduction. In debt settlement, you stop paying your enrolled debt, and instead pay into a special bank account. As this fund grows each month, your debt settlement partner starts contacting your creditors and begins negotiations. The goal is to make lump-sum settlements with each creditor. Results vary, and the more you can put into your special account the faster you graduate from the program. Typical program lengths range from 24 to 36 months.

The cost varies, too. You pay nothing until the first debt is settled. (If you are asked to pay anything in advance, stop and find another debt settlement partner.)


Feeling a little overwhelmed by your choices? You need a coach, and has the right one for you. Debt Coach is a no-cost, no-gimmick tool where you enter all of your debts into a calculator-like online gadget. You also enter your goals, and how much you can afford to pay to rid yourself of your debt. Debt Coach then gives you the costs of each debt-reduction strategy, including others we did not discuss in this article.

Just like some people like trail running, and others like Parkour free-running, different debt resolution strategies work for different people. Pick the training strategy that works best for you, and you will measure your debts fall each month. Get started!

Debt statistics

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

Each state has its rate of delinquency and share of debts in collections. For example, in Louisiana credit card delinquency rate was 5%, and the median credit card debt was $355.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.