When you're struggling with lots of debt, debt consolidation may be an attractive solution.This term refers to combining your debts into one, and making one monthly payment to one creditor instead of making multiple payments to many creditors.You will lose your rights under the federal loan programs once you choose to consolidate with a private lender.Direct consolidation loans are now the only type of federal student consolidation loan.Be sure to consider the following before you fill out the application: Unsecured loans are commonly referred to as personal or signature loans.
(see box below), You can consolidate during grace periods.
When you're experiencing financial distress, these companies, also referred to as debt management companies, work with your creditors to restructure your unsecured debt.
Through a debt relief plan, you make one monthly payment to them, and they pay your creditors.
Make sure you know what rate will be in effect after the first couple of months.
If it's too high, this option may not be your best choice.