Best Debt Consolidation Providers 2020 - Leave Debt Behind You

Michael Dinich

Debt consolidation is simply a process by which you use one source of money to pay off the balance owed to multiple debtors.

So, for example, you could have 3 credit cards with outstanding balances, a student loan, and a personal loan, all with balances that need to be partially paid out each month.

A debt consolidation loan takes care of all of these debts and rolls them up into a single, more manageable monthly payment that is often lower than the previous payments you were making combined.

When done right, debt consolidation loans can help clear up your debt and improve your credit over time. The first step is to compare the best debt consolidation providers to see which one is right for your needs.

Consolidating multiple forms of debt
People with major debt they can't pay back
People in debt who want to know their options
User-friendly comparison of finance options
Straightforward and reputable debt help
Getting help with financial hardship
Credit card, medical bills, unsecured debt
Unsecured debt such as medical, credit cards
All types of unsecured debt
All types of debt payable by personal loan
All types of unsecured loans
All types of unsecured debt
$7,500
$10,000
$5,000
$1,000
$10,000
Undisclosed
None
None
Varies based on loan provider
3.84%
None
None
*N/A
*N/A
Varies based on loan provider
24-84 months
*N/A
*N/A

The Best Debt Consolidation Providers - An In-Depth Look

  • 1

    Freedom

    Debt-free within 3 years
    Freedom
    • Minimum Debt$7,500
    • APRNone
    • Loan Terms*N/A

    Freedom DRis probably the biggest name in debt relief in the country. It works on the debtor’s behalf to negotiate a lower debt amount, kind of like debt forgiveness programs. What makes Freedom DR so successful is its powerful negotiation skills. Many customers have ended up settling 50% of their debts, only having to pay half of what they originally owed.

    Freedom DR offers consumers a free consultation with a professional debt consultant to help figure out your best move. The consultant will create a customized game plan appropriate for your situation and debt, so consumers end up paying significantly less and paying off their debt in just a few years.

    Read Freedom DR Full Review

    Pros
    • Multiple debt relief loan options
    • Free consultation with certified debt consultant
    • Pay off debt in 2-5 years and save
    Cons
    • Debt settlement requires not paying your debt for a period
    • Doesn’t work with collateral-based and federal loans debt
  • 2

    Accredited DR

    Knowledge is power, get educated
    Accredited DR
    • Minimum Debt$10,000
    • APRNone
    • Loan Terms*N/A

    Accredited DR is another excellent choice if you're looking for a way to reduce your debt, get debt-free, and avoid bankruptcy altogether. Offering multiple debt-relief options, including debt settlement, debt consolidation, and debt management, Accredited DR will tailor your debt relief solution to match your specific situation. You'll fill out a quick online form, and then Accredited DR will do the rest.

    Accredited DR offers consumers a free consultation with a professional debt manager to help get things started. And what’s even more encouraging about this company is the tremendous accolades it boasts. From an A+ Better Business Bureau rating to an Excellent 5-Star reputation from TrustPilot and more, Accredited DR is known for sterling customer service.

    Read Accredited DR Full Review

    Pros
    • AFCC accredited
    • Online dashboard to keep tabs on your debt settlement
    • No fees until your debt is settled
    Cons
    • Not available in all 50 states
    • May receive calls from creditors until debt is settled
  • 3

    Debtadvisor

    Your one-stop-shop for all debt relief options
    Debtadvisor
    • Minimum Debt$5,000
    • APRVaries based on loan provider
    • Loan TermsVaries based on loan provider

    Debt Advisor is a professional network dedicated to helping consumers find the right debt relief solution for them. Whether you’re looking for debt relief in the form of a debt consolidation loan, want help getting debt settlements, need to manage your student loans, aren’t sure what to do about tax debt, or any number of the many issues that land people in financial debt, Debt Advisor has the solution to help.

    Fill out a brief form and get connected to a professional debt consultant in minutes. Debt Advisor is particularly beneficial for consumers because of its wide range of options and consultants. The network works with every variety of financial consultant, so you aren’t limited in your options. Debt Advisor is a member of the American Fair Credit Council, so consumers can rest assured that they are being cared for properly.

    Read Debt Advisor Full Review

    Pros
    • Both loans and debt relief options
    • Totally free service that works in minutes
    • Flexible debt amounts
    Cons
    • Doesn’t have any debt relief solutions directly
    • No live chat option
  • 4
    Putting the fine back in finance
    Fiona
    • Minimum Debt$1,000
    • APR3.84%
    • Loan Terms24-84 months

    Fiona is the quintessential financial product for the 21st century. It’s friendly, it’s chic, and what’s more, Fiona could help you save considerably while paying off your current debt. Like LendingTree and Credible, Fiona works with the top lenders in the country from Marcus by Goldman Sachs to Best Egg and OneMain Financial, to find you the lowest rates and the most flexible loan terms possible.

    Using Fiona, consumers can take out a debt consolidation loan, pay off all of their debtors simultaneously, and be left with a single monthly payment to make. That’s a lot more manageable than chasing multiple collectors each month. Fiona lets you quickly and efficiently compare different loan rates. It’s also nice that you can sort the quotes by APR, lender, payment amount, or loan terms, so you can make an educated decision based on your most important criteria.

    Read Fiona Full Review

    Pros
    • Excellent comparison and filtering tools
    • Works with the best lenders in the country
    • Friendly, easy to use system
    Cons
    • Not a direct lender
    • Lots of offers can get overwhelming
  • 5

    Pacific Debt

    A reputation for reliable and quality service
    Pacific Debt
    • Minimum Debt$10,000
    • APRNone
    • Loan Terms*N/A

    Pacific Debt has been helping people settle their debts for almost 2 decades now, and it’s successfully managed close to $200 million worth of debt. Known to be reliable, Pacific Debt has earned an A+ rating from the Better Business Bureau. That rating means the company has proven itself to be trustworthy, reliable, and consistent in coming through with its promises. Bottom line, Pacific Debt is a company you can trust.

    Pacific Debt offers assistance dealing with all types of unsecured debt, from overwhelming credit card debt to debilitating medical bills and beyond. The company takes no upfront fees. You only pay if and when your debt is settled. Pacific Debt works with people who have as little as $10,000 in unsecured debt, so it’s a viable option for just about anyone struggling with financial hardship.

    Read Pacific Debt Full Review

    Pros
    • Average savings is 20%-50% of original debt
    • Highly-reputable in the industry
    • No upfront fees
    Cons
    • Doesn’t work in all states
    • Will receive creditor calls
  • 6

    US Financial Alliance

    Managing debt has never been simpler
    US Financial Alliance
    • Minimum DebtUndisclosed
    • APRNone
    • Loan Terms*N/A

    US Financial Alliance offers both consumer and business debt relief solutions. It provides people with several options for handling their debt, including consumer credit repair and building, loan modification, student loan refinancing, and of course, debt relief. US Financial Alliance works with all types of unsecured debt, including non-federal student loans, credit card debt, repossessed car loans in collection, utility bills, and personal loans.

    US Financial Alliance helps consumers get out of debt on average in 3 years or less. And with the debt relief program, most people end up paying significantly less than the original sum owed. Using practiced negotiation skills, US Financial Alliance fights on your behalf to lower the amount of debt you owe, so you can get out of debt faster and more comfortably.

    Read Financial Alliance Full Review

    Pros
    • Be debt-free in 24-48 months
    • Works with a wide range of unsecured loans
    • Free financial assessment
    Cons
    • No debt consolidation loans available
    • Have to wait out the entire program once you start
Frequently Asked Questions
Are debt consolidation loans a good idea?
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Debt consolidation loans are helpful for managing multiple debts and are a good idea for those who are serious about paying back their debts and restoring their credit scores.
Do debt consolidation loans hurt your credit?
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There may be an initial dip in your credit score since taking out a debt consolidation loan requires a credit check. In the long run, however, paying off your debt will help your credit score.
Are debt consolidation companies legit?
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Yes, there are many legit debt consolidation companies offering debt consolidation loans. Doing some simple research into the company, its qualifications, and its interest rates can help you find a respectable company to go through.

A Bird’s Eye View of Debt Relief

What are APRs, and How Will a Lower One Help Me?

APR is the single most important factor to consider when comparing and considering debt consolidation loans. APR refers to an annual percentage rate, and it's not exactly the same as interest rates. Here's the main difference:

  • Interest rate:The percentage you’ll be charged by a lender for supplying you with a loan

  • APR:Includes the interest rate AND any fees charged by a lender when taking out a loan

So, an APR really gives you a broader scope of how much it’ll cost you to take out a loan. What this means is that the lower the APR you can get, the less you’ll be paying out over the life of your loan. In short, a lower APR means less money paid out of your pocket. That’s good news for the borrower.

How Does Debt Consolidation Work?

Debt consolidation loans are convenient for people, whether you’re good at math or not. If the numbers have got your head spinning, here’s how it works:

Let's say you have 3 credit cards on which you owe $1000 each.

Three credit cards X $1000 each = $3000

You also have $55,000 in student loans to be paid off and a private loan that you took out (to fund a dream destination vacation to the Bahamas) for $15,000. That’s another $70,000 in outstanding loans.

Each month, you’ll have to pay out a certain percentage (according to the minimum payment requirements and the APR subject to the specific loan) of the amount owed to each lender. So, you might have to pay out $100 to American Express, $100 to Visa, and $100 to MasterCard. Then, you also have to pay $200 towards your student loan and another $100 towards your private loan.

Altogether, these payments come out to $600 per month. The payments are deducted from your overall balance, and this continues until you’ve paid off the entire debt amount. Now, here’s how it works when you introduce a debt consolidation loan into the picture.

  • You take out a new debt consolidation loan for the full amount of your debt, $73,000.

  • You pay off your entire credit balance for each of the three credit cards: $1,000 to American Express, $1000 to Visa, and $1,000 to MasterCard.

  • You pay off your entire student loan: $55,000.

  • You pay off your entire private loan: $15,000.

Now, you're debt-free, right? Sort of. You have no more outstanding debt. The only thing you have to pay off now is your debt consolidation loan. So, instead of having to make five individual payments each month, you've shrunk your debt repayment requirements down to a single monthly payment. That is helpful in two ways:

  1. You only have to pay off a single debtor, so your monthly payments will be significantly less than if you had to keep five individual lenders happy.
  2. You alleviate the headache of having to juggle five different payments with five different amounts, payment schedules, due dates, fees, and more. One payment is much more manageable mentally than five.
  3. What’s more (and often most important), you end up paying less all around because you have lowered your interest rate.

How to Choose the Best Debt Consolidation Company

Look for a debt consolidation loan provider that:

  • Is offering a lower interest rate (and APR)

The most important feature is the APR. With a lower interest rate, you can end up saving considerably on your debt consolidation loan. With a higher one, you’re shooting yourself in the one good foot you have to stand on.

  • Has experts to talk to

Most of us don't know very much about finances and how these things work. For that reason, it's essential that you find a debt consolidation lender that will walk you through the whole process, answer any questions you have, explain all the terms, and be clear with you about any details that are murky.

  • Is flexible

Repayment terms, prepayment penalties, late payment fees, and more will vary from one lender to the next. Find a lender with flexible terms that you can work with for the most pleasant borrowing experience.

Consolidation, Management, Settlement: Know Your Debt Relief Terms

Here are some definitions of important debt relief terms, so you feel comfortable when talking to debt relief companies about getting a handle on your financial standing.

Type of Debt Relief
Description
Top Pro
Top Con
Debt Consolidation
Consolidates multiple debts into a single loan with one monthly payment.
Reduced interest rate and lower payments
Minor short-term damage to credit score
Debt Management
Debt management provider negotiates with your creditor to get you a lower interest rate or longer term.
Smaller, more manageable monthly payments
Forced closure of other credit accounts
Debt Settlement
Debt attorney negotiates with your creditors to get them to agree to partial repayment.
Being released from part of the debt
Stays on credit score for 7 years

Debt Consolidation

Consolidating your debt brings together all debts under one umbrella, so to speak, “consolidating” them and giving you one bill to pay each month. You could have many credit cards or personal loans, for example, and end up with one payment. This is accomplished through debt refinancing, where you take on one larger loan from the debt consolidation company to pay off all the other smaller debts.

Some of the top agencies for debt consolidation, use private investors to pay off your loans, traditional lending institutions like banks or credit unions are more common. In exchange for the loan, you may need collateral, often in the form of a mortgage or home equity loan – so pay off the consolidated debt according to schedule.

Debt Management

Managing your debt might be the gentlest way to handle a debt crisis: you and the institutions you owe arrive at a formal agreement that determines the terms of your payments. It is likely to your advantage because establishing a plan with your creditors means that you have say in establishing what repayment terms work best for you.

Ways to improve your terms:

  • Extend the length of the loan for reduced monthly payments
  • Negotiate a reduced interest rate
  • Reduce the overall debt, when possible

You may find assistance in your attempts to manage your debt through agencies that negotiate on your behalf or debt counselors who can coach you through new budgets and plans for repaying your debt. 

Debt Settlement

Debt settlement is an arrangement between you and your creditor to reduce what must be paid to be considered “paid in full.” That new reduced balance can often be spread over a series of payments. The willingness of lending institutions to allow for debt settlement is counter-intuitive: after all, they lose out on money that they are owed. Creditors find incentive, however, through the skillful negotiations of top notch debt settlement companies like Freedom Debt Relief, which may include advising you to stop all payments until an arrangement is achieved.

If your debt relief company can display your willingness and responsibility to pay what you can, while showing your inability to meet the full loan amount and the monthly payments, debt settlement can free you from the shadow of your debt. Talk to a professional and see what your options are. 

When to Consider Debt Consolidation

A debt consolidation loan is the right idea if you:

  • Are struggling with multiple types of debt
  • Want to increase your credit utilization ratio
  • Want to build your credit by diversifying

Of course, it is also worth noting when it's NOT a good idea to take a debt consolidation loan. If you are currently in major credit card debt due to irresponsible spending and you don't intend to change these habits, walk away. While a debt consolidation loan can help alleviate your debt, it will only work if you have every intention of taking a more responsible course of action in the future. Clearing your debt quickly leaves a tempting void on your credit line, freeing up that line to more spending. If you aren't careful, you could easily find yourself in even greater credit card debt than before you started.

Michael Dinich
Michael has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, pay down debt and save for retirement. Michael is passionate about personal finance, saving money, and all things geeky.