Define: Debt Consolidation Program

A debt consolidation program is a financial strategy aimed at simplifying and managing multiple debts by combining them into a single loan or repayment plan. This typically involves taking out a new loan, such as a personal loan or home equity loan, to pay off existing debts, including credit card balances, medical bills, or other loans. By consolidating debts, individuals can often benefit from lower interest rates, reduced monthly payments, and a single, more manageable payment schedule. Debt consolidation programs may be offered by financial institutions, credit counselling agencies, or specialised debt consolidation companies. They can provide individuals with a structured approach to paying off debt and regaining control of their finances.

A debt consolidation program is a program in which several of a person’s debts or loans are combined into one large loan. With a debt consolidation program, a new loan is created. People participate in a debt consolidation program for a variety of reasons, the most common of which is to pay a lowered interest rate. Thus, a debt consolidation program is popular among people with credit problems, such as excessive credit card debt, high student loans, and other types of debt. A debt consolidation program can also be used for sheer simplicity. A debt consolidation program is also called a consolidation loan. For some people, a debt consolidation program is used as part of a plan to prevent creditors from taking legal action.

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This glossary post was last updated: 29th March, 2024.