Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
Debt Relief & Settlement Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Proven Results
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
    • Careers
Qualify For Debt Relief
Debt Relief & Settlement Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
United Settlement » Debt Consolidation » How Does Debt Consolidation Work
Gabriel Gorelik September 1, 2022

How Does Debt Consolidation Work?

The process of debt consolidation involves consolidating multiple debts into one single loan, typically resulting in a lower overall blended interest rate and a more manageable monthly payment. A debt consolidation loan (DCL) provides the dual benefits of streamlining the repayment process while simultaneously lowering interest expense and the total amount repaid over time. Types of DCLs include personal loans, promotional low-interest rate credit card balance transfers, home equity loans and student loan consolidations. For those individuals struggling with a large amount of high interest rate debt, a debt consolidation loan is one way to refinance your debt. Learn how debt consolidation works and how it can help you stay organized and possibly save money.

How it Works

consolidate-debtIn a debt consolidation loan scenario, a debtor borrows sufficient funds to first pay off all unsecured debts (high interest rate credit cards, medical bills, some student loans), thereby simplifying multiple monthly payments into one single monthly payment at an overall lower blended interest rate. Funds generated from a DCL are to be immediately deployed for paying off existing balances (ideally, in full) on a number of pre-existing debts. When several bills are consolidated into one simple monthly payment, the risk of submitting late payments that cause additional fees and credit score damage, as well as the risk of making mistakes related to sending inappropriate amounts to certain creditors are decreased. The recipient of a DCL also usually benefits from a reduction in the overall monthly payment on the aggregate debt balance while lowering interest rates and interest expense.

Additionally, debt consolidation can help protect your credit score while getting the debtor out of debt in a shorter period of time. As long as the debtor acts responsibly and makes regular timely payments, debt consolidation will have a positive impact on a debtor’s credit score.The DCL provides the dual benefits of streamlining the repayment process while simultaneously lowering interest expense and the total amount owed over time. However, it is important to know in advance whether your cash flow is sufficient to cover the cost of the monthly payment on a new fixed rate DCL. As a general rule, the total amount of your debt should not exceed 50% of your annual income – otherwise it could make better sense to pursue alternate forms of debt relief that include debt settlement, a debt management plan, or even bankruptcy.

Related to: Debt Consolidation

  • Debt Settlement
  • Debt Management
  • Bankruptcy
  • Go Back to Debt Consolidations

How Do Consolidation Loans Work?

Debt consolidation requires organization, patience, time and self-discipline. Begin by itemizing all of your bills – credit card, medical, utilities, and any other unsecured debt. Next, tally your basic necessity expenses separately – housing, groceries, transportation, and given your regular monthly after-tax income, determine how much you will have left over that can be allocated toward a single monthly payment against your unsecured debt. It is important to recognize that although DCLs are popular for the convenience and debt savings that they often provide, they can sometimes result in longer repayment schedules, depending on how low your new monthly payment amount becomes. It is also important for the debtor to possess the self-discipline necessary to adjust away from the poor spending habits that led to accumulating excess debt in the first place – otherwise any debt consolidation loan simply isn’t likely to work in the long run.

Debt consolidation loans are generally available through banks, credit unions, and online lending sites. Additionally, those individuals with stronger credit scores in the 700s or higher should investigate debt consolidation through promotional low interest rate balance transfer offers on credit cards. Although promotional low introductory balance transfer rates often expire within 6-18 months and can carry fees in the range of 3-5% of the amount transferred, most every dollar paid on them will go toward reducing the principal on the debt.

debt-consolidation

Excellent
Based on 377 reviews

Overall 4.4 out of 5 stars

View All Reviews
March 14

That when it seems like nobody can help United will.

This was a great experience for me. I am just starting but Madelene Gallon made me feel like we were friends for years. She tried to make me feel that she would help me and make sure I got the best deal from United. I hope this...

Annette Huggins
March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible, but it would be fairly...

Kiirstin
March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible, but it would be fairly...

Kiirstin
February 28

Quick, easy assistance!

I've been working with Ben at United Debt to help me organize and get out of debt for once - I've been dealing with debt for ages and Ben showed me some simple ways to begin dealing with things to keep me from bankruptcy or worse....

Dylan
February 14

I need help

I really appreciate

Takota Carrie
December 21

Great!

Renika went above and beyond today to help me. She is wonderful to work with! Thank you again Renika for all of your help today! Happy Holidays to you!

JONICA Amber PIRON
December 20

Paying back

They where great listeners

Jayvon
December 14

Everything

Thanks

Shawn abetha
November 23

Do your home eork

Paid several thousand dollars and nothing done. Ended up settling 90%by myself. This is a preatory company. So do your homework. This will never post.

Robert Phillips
November 18

Customer service is truly helpful

Renika was so helpful. My account was paid off but I kept receiving notifications. She cleared up the situation.

Dm
November 16

Great Customer Service

Renika did a wonderful job handling my questions and transactions. She is very patient on the phone and took care of my needs accordingly.

Jose Rosa
November 03

Very helpful

Renika did a great job in answering all of my questions in a timely manner. She was polite and friendly. Keep her on the payroll.

Russ
October 31

What's Important to me is United Settlement Costumer service !

United Settlement Costumer service is Amazing Everyone is Professional . I am so happy choosing them with my card Debt. thank you all for helping me out .

Anthony Desoto
August 23

That this company has integrity!

A responsive company that keeps it clients up to date and fully informed. I like the fact that I can send them a text and be guaranteed an answer within 24 hrs.

Ri cky
June 04

Professional and focused on facts and truth not hype. Excellent. We want to know facts.

Great work very professional and great updates. Communication is excellent.

Jerry Bolandis
October 25

trust them

Excellent. Also each time i call there they treat me with respect even though they are probably thinking jerk . You sure have made mess of your life. but they have been taught to smile smile smile. this agency is just awesome....

janice head
August 01

Thanks for all your help and negotiations.

Thanks for the update! I have faith in you guys and will continue my payments. Thanks for all your help and negotiations.

Scott W O'Neill
July 30

That A Settlement Was Entered.

I Absolutely Love You All At United Settlements. You All Have Saved My Credit Solutions. I Would Refer Everyone To You Services.

Cassandra Robinson
July 16

The results of the settlement attempts.

So far, I have found United Settlement more than satisfactory. Very conscientious and very efficient in providing a service in debt settlement. Thank you and all the members of your team who are assisting in bringing me new life. ...

Mildred Yvonne Sherron
July 16

Tough Financial Hard Times During Covid-19

I signed up with United Debt Settlement because of large credit card debts, which had taken a financial toll on my credit. UDS has an outstanding reputation assisting clients like me achieve financial recovery and success. During...

Diana Cardona
  • Contact Us
  • 240 West 37th Street
    Suite 400
    New York, NY 10018
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
  • Careers
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 25% including fees, over 24 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us. NMLS ID: 1947026
    Copyright 2023. United Debt Settlement, LLC
     

    Loading Comments...