Bill Consolidation

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What - Definition
Bill consolidation is a method by which one may consolidate unsecured debt or bills. Bill consolidation is relevant to:

  • Unsecured Credit - money that you borrowed (credit card, store and gas cards and unsecured loans). 
  • Service Bills - certain services that you received (Attorney bill, Medical bill, Utility bill, Other).

One may consolidate bills in two ways:

Methods To Consolidate Bills
1. Bill consolidation under Bill Consolidation Programs
2. Bill consolidation through Bill Consolidation Loans

bill consolidation programs

Bill Consolidation Programs


A Bill Consolidation Program is a structured payment program run on your behalf. Bill consolidation programs can include debts of both Unsecured Credit and Service Bill types however, bill consolidation for some service bills may not be available and some accounts (e.g. utility bill) may need to be past due and closed inactive in order to bill consolidate.

With bill consolidation programs that consolidate bills there is no actual consolidation of debt. This is because when you bill consolidate:

  • You still owe all of the amount that you borrowed /owe and:
  • You still owe each individual creditor and are legally obligated to each - until you have successfully completed the plan.

bill consolidation programs Therefore, bill consolidation using the bill consolidation programs method is actually Payment Consolidation. Although there should be a reduction in the total amount of debt paid off when you consolidate bills as a result of lower interest rates - debt is not consolidated, you only consolidate bills.


How - It Works

Bill consolidation takes place when you enlist the service of a company or agency to handle your bill payments. The provider makes payments to all creditor accounts enrolled in the bill consolidation program on your behalf. They do this using money that you pay them once each month as an installment. Bill consolidation programs require that you make one routine monthly payment or installment to the service provider.

Aka: Debt Consolidation Programs or Debt Management Plan.
Confused? See our summary of alternatives for Debt and Consolidation


Although many organizations run bill consolidation programs, they are essentially the same in terms of the process. Once the need for a program to consolidate bills is decided, only the choice of provider with which to consolidate bills remains.

When - Consider Debt and Bill Consolidation

Bill consolidation is not appropriate to every situation of for every person with a debt and bill consolidation problem. Here's when a bill consolidation program could make sense. Note: a licensed credit counselor should first advise you before signing up for any bill consolidation program.

  • The difficulty relates to unsecured credit and bills.
  • There are a few accounts across a few creditors to bill consolidate.
  • Your desire to bill consolidate is in large part due to being disorganized and bill consolidation could help you manage things easier.
  • The income that you receive is relatively consistent and you are not suffering financial hardship by definition.
  • You have been juggling and missing payments or making late payments.
  • There is no legal action involved or major collections. A bill consolidation service can negotiate with collections companies.
  • You could afford to pay back creditors each month if the amount due was less.
  • You have a blemish on your credit report or a relatively poor score.
  • Bill consolidation alternatives are unavailable or undesirable.

Why - Benefits

The main benefits of bill consolidation are:

  • A reduction in the interest rates paid when you consolidate your bills and therefore:
  • When you consolidate your bills a reduced total cost of debt is paid off.
  • A single payment replaces the need to pay individual creditors, useful with credit card bill consolidation
  • A lower monthly outgoing compared to the collective total of previous individual creditor payments (e.g. credit card bill consolidation).

Qualify - Bill Consolidation Programs 

A credit counselor will first qualify you for any bill consolidation programs. They will analyze your income, expenditure and debt obligation as part of a free bill consolidation review. If it is decided that bill consolidation is appropriate, then providers of bill consolidation programs will confirm what bill types may be included in their program. Utility bill or medical bill consolidation may not be possible under every program or there may be some restrictions. For example, medical bill consolidation may require that the account be past due.

  • To consolidate bills you'll need to have significant balances on a few accounts.
  • To consolidate bills you should have sufficient income after primary creditors, rent or mortgage in order to pay a reasonable bill consolidation installment.
  • The rate of interest that you are currently paying is significant and greater than what a bill consolidation programs' provider could negotiate.


Bill consolidation should be preceded by a session with a certified credit counselor. In most cases this will be free. Bill consolidation programs involve a small program set up charge. Your monthly installment contains the admin fee.


Bill consolidation programs typically take 3-5 years to complete, depending on circumstance it could be sooner. The main point to note is that bill consolidation is an ongoing repayment plan commitment, designed to pay off debt in a manageable timeframe.

Who - Providers

  • Bill Consolidation Companies and agencies by various name e.g. "relief", "credit" "debt", "counseling" (aka Debt Consolidation Companies).
  • Credit Counseling Agencies (Debt Consolidation Non Profits)
  • Professional Private Credit Counseling Services.

Bill consolidation companies are numerous and may provide other debt and bill consolidation services.



In addition to the benefits listed above, debt and bill consolidation under the bill consolidation programs method can:

  • Mean an end to harassing collection calls.
  • Debt and bill consolidation can foster the fiscal behavioral changes necessary for longer-term financial health.
  • Provide ongoing support and networking over debt.
  • Bill consolidation does involve the help of skilled negotiators who have a business relationship with creditors.


  • No consolidation of debt or creditors.
  • Bill consolidation does not dismiss legal obligations.
  • A bill consolidation program is a long-term commitment.
  • May offer only a small reduction in monthly outgoings.
  • Creditors have no legal duty to participate in bill consolidation programs and some may be disinterested.
  • Credit report implications.
  • Fixed installment must be maintained throughout.
  • Reliant on a third party /competency to manage the program efficiently.
  • Credit card accounts will likely need to be closed and no further credit applied for as a condition.

Application - Process

Bill consolidation programs may be recommended by a licensed counselor who has reviewed your finances. All other options should have been evaluated. A bill consolidation company or program provider should indicate the monthly installment cost only after a counselor has reviewed all your data - but also before you sign up. The bill consolidation program provider negotiates with each of your creditors for more favorable repayment terms. On acceptance by all with bills consolidation you begin to pay the agreed installment each month that gets dispersed to your creditors. The process continues until all debt enrolled is paid off.

Application - Info

The counselor needs data to evaluate for bill consolidation or alternatives. You need to pull out recent card, bank and other statements. Proof of income, debts and interest rates payable. You need to list your expenditure. Fixed: mortgage or rent, car or secured loan payments, insurance etc. Variable: utilities, gas, food and other etc. Gather info on all your spending in readiness for a counseling session before you consolidate bills. Many bill consolidation providers will supply there own bill consolidating check-sheet of information required to consolidate bills.

Bill Consolidation

For Further information on the Bill Consolidation Programs method, including what to look for and steps to take, continue: Debt Consolidation Programs

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