The loan may be obtained through debt relief companies, or through your bank, or as a home equity loan if you own a home.Although this approach has the basic appeal of consolidating your debt into one monthly payment, there are significant costs and risks involved: As one of the nation's leading non-profit debt management agencies, ACCC offers a way to consolidate unsecured personal debts without having to borrow more money. In short, we work out an arrangement with your creditors whereby you make one consolidated payment to ACCC each month and we then make the monthly payments to your creditors.

What are the benefits to this approach to debt consolidation, beyond simplifying your monthly payment requirements?

Here’s how credit card consolidation works: You first decide if you want to take out a new loan, open a new credit card or enroll in a debt management plan (more on that later).

There are three major types of debt consolidation: Debt Management Plans, Debt Consolidation Loans and Debt Settlement.

These are not quick fixes, but rather long-term financial strategies to help you get out of debt.

Consolidate Your Debt Now Debt consolidation is combining several unsecured debts — credit cards, medical bills, personal loans, payday loans, etc. Instead of having to write checks to 5–10 creditors every month, you consolidate bills into one payment, and write one check.

This helps eliminate mistakes that result in penalties like incorrect amount or late payments.Moving the balances of your credit card accounts into an installment loan for purposes of consolidation may cause a slight drop in your credit score.The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.Whichever option you choose, you will use it to pay off your multiple balances.Then you’ll only have one monthly payment: the loan, the credit card or the debt management plan.How does debt consolidation work when a loan is involved?