“The company will then use this money to attempt to negotiate with creditors to reduce the amount of principal you pay off.” If you’re considering this option, try to speak with a nonprofit credit counselor first because debt settlement can put your credit in jeopardy.
(You can learn more about choosing a credit counselor here.) If you don’t pay your debt, creditors could hire debt collection agencies, which could lead to a lawsuit, the CFPB says.
[Disclosure: Cards from our partners are reviewed below.] Debt consolidation is a type of debt refinancing that allows consumers to pay off other debts.
In general, debt consolidation entails rolling several unsecured debts, such as credit card balances, personal loans or medical bills, into one single bill that’s paid off with a loan.
There are several different types of consumer debt.
However, the most common debts are credit card debt, medical debt, and student loans.
That’s because some may be debt settlement companies that convince you to stop paying your debts and “instead pay into a special account,” the CFPB warns.For example, you can use money from your IRA interest-free for 60 days.