Debt Consolidation Program

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What - Definition
A debt consolidation program is a bill or payment consolidation plan administered by a company on your behalf. With a debt consolidation program your individual debts remain unconsolidated, that is, each separate creditor remains and they are not immediately paid off, since no loan is involved. What IS consolidated is your payment activities, since you now make one payment only to the debt consolidation program administrator. Strictly defined, this alternative is not debt - but Payment Consolidation.


  • For Unsecured Debt only.

best debt consolidation program

  • For credit cards, gas and store cards and unsecured loans. Also some medical, hospital and attorney bills, past-due utility bills from closed accounts; collections accounts and other balances or debts that you have, which are not secured against collateral like a house or car.
  • The debt consolidation program provider works on your behalf with unsecured creditors and collection agencies.
  • A debt consolidation program is an ongoing payment plan. Creditors are routinely paid on your behalf by the company/agency that you have selected to manage the debt consolidation program for you. The debt program provider pays all your creditors whilst you pay only the debt program provider.


Aka: Debt Management Plan, Debt Management Program, Debt Consolidation Plan, Debt/Credit Counseling
Confused? See our Debt Consolidation Summary

How - It Works

The debt program involves no loan. Your debt program provider negotiates with your creditors (for example each card issuing bank) in order to lower their interest rate and often waive any late fees and penalties. Depending on the type of debt, a debt consolidation program provider may be able to negotiate an extended repayment term or period. Whilst a debt consolidation program provider can negotiate lower interest rates, they do not seek to reduce the principal debt - only the interest payable on it.

You make one, fixed monthly payment to the program operator. The program operator then disperses payments to all your creditors at the lower interest rate/terms they have negotiated. The amount that you pay monthly to the debt consolidation program operator is agreed upon in the beginning and should be an affordable monthly payment that is less than the combined total of your previous payments.


There is only one type of such debt consolidation program in essence. The question of choice relates to whom you choose to administer the debt consolidation program.

When - To Consider

The purpose of a debt consolidation program is to gradually pay off your unsecured debts by means of the provider making your payments which, includes some principal plus (lowered) interest rate. The debt program is neither appropriate nor relevant for everyone. The debt program may be a viable option or best suited if:

  • Your debt difficulty is with unsecured debt (typically credit and store card debt).
  • You have stable income and a genuine ability to pay at, or above the minimum payments that creditors require.
  • You are not experiencing financial hardship or grossly over extended on bills.
  • You are not seriously delinquent or long subject to major collections. Debt consolidation program providers can deal with collection agencies. 
  • You've made one or more late payment and find yourself trying to juggle creditors.  
  • You need help better managing your payments and finances.
  • You have a below average credit score making alternatives to a debt consolidation program less viable.
  • You do not have, or cannot qualify for potential alternatives as identified in our summary.

Why - Benefit

Under a debt consolidation program you should benefit from reduced interest rates and the simplicity of having to make one fixed payment only instead of juggling various bills and payment decisions. The total amount paid back to the lenders should be less.


  • Significant unsecured debt, with a number of different creditors involved.
  • You can demonstrate an ability to afford a reasonable payment into the debt consolidation program each month after other primary commitments.
  • The combined interest rate payable on your debt currently is greater than at least 10%.


A debt consolidation program admin fee is normally included within the agreed monthly payment that you make.


4-5 years on average to complete the program. The amount you pay on a monthly basis is structured or calculated so that after this period all the debt placed into the debt consolidation program is paid off clear.

Who - Providers

  • Debt "~" Company/Agency. ("Debt" or "Credit" named operators, collectively known as Debt Consolidation Companies)
  • Professional Credit Counselor (For Profit Private Counselor Services)
  • Credit Counseling Agency (Known as Non Profit Debt Consolidation)

  • One fixed routine payment instead of several to manage.
  • Lower interest rates and penalty concessions (waived fees) negotiated for you by skilled negotiators who have bargaining power with creditors. 
  • A lower monthly outgoing compared to before.
  • May stop debt collection calls. 
  • Participation in a debt consolidation program cultivates increased financial discipline. 
  • A good debt consolidation program comes with further advice and resources to help you budget and manage money more effectively. 


  • The principal amount of debt is not reduced under a debt consolidation program, merely the interest payable on the principal.
  • The debt itself is not consolidated, meaning that you still owe several individual creditors until such time as you have successfully completed the program.
  • Your creditors are not under any firm obligation to participate, at the outset, or at anytime.
  • Card/accounts may need to be closed or not used further whilst the debt consolidation program is running. A lowered credit score may result.
  • You may have to agree not to seek further credit for the duration of the debt program.
  • Participation in the best debt program shows up on your credit report and can impact your ability to get credit or a favorable interest rate for some time.
  • You rely on the debt consolidation program manager to make payments to your creditors on time with consequences if they do not. 
  • An inflexible fixed monthly payment leaves no scope in the event of any sudden emergency expense. 
  • Payments into the best debt consolidation program may be higher than those under a settlement program.

Application - Info


Information as to your income and all your expenditures needs to be gathered by yourself, and analyzed by the provider, prior to any suggestion to enroll in a debt consolidation program. - Pay stub and other income verification. - Mortgage or rent payment, car payment, insurance, utilities, typical groceries and other variable cost expenses. All billing statements including credit cards, store cards, loan payments and any other routine bills or payment commitments. You'll need to show what the current interest rates are on borrowed money. - Bank statements.

Application - Process

The process should begin with a counseling session where your debt, current payments, income, expenses and general financial situation is examined. At this stage all options or alternatives for debt and consolidation should be discussed. A reputable provider should be prepared to advise you that a debt consolidation program is NOT appropriate, and that self-help or an alternative consolidation approach is preferable. IF it is decided that a debt consolidation program IS indeed the way forward, then the provider should next provide an indicative quote for the monthly cost and likely debt program duration, prior to you signing up for the debt program. - The provider will seek to negotiate with each creditor and secure a favorable interest rate reduction and waiver of fees or penalties where applicable. - You begin to make one monthly payment to the provider. A free debt consolidation program suitability check is an important part of the initial process.

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