Debt management. Debt management is a service offered by credit counseling companies. Credit counseling services work with customers and creditors to create a plan for managing debt. With this plan, the agency negotiates to make paying down debt easier for the customer, usually by lowering interest rates or forgiving late fees. The credit counseling service will take payments from you and use your payments to pay off your debt according to the new schedule. For every payment you make, the credit counseling service receives a percentage from the creditor.
Many debt consolidation plans involve a new loan, and with any new loan there are risks. Make sure your debt consolidation loan has a favorable interest rate and a manageable monthly payment - or you may find yourself in the same situation you started out in. Debt consolidation loans also do nothing to lower the total amount that you owe your creditors - they simply move the debt to a new creditor.
Lower your interest rate: This is where you have to run the numbers to see if debt consolidation makes sense for you. What’s the average interest rate you’re paying on your debt? If it’s quite high (which is likely if you have a lot of consumer debt), you may benefit from consolidating under better terms. Just remember to only use a personal loan if the interest rate is lower than the one you are already paying.
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You can choose between a fixed- or variable-rate loan with SoFi. There are no origination fees or prepayment penalties. SoFi offers loans of up to $100,000 with loan periods of up to seven years, which is one of the highest amounts and longest loan periods available for a debt consolidation loan. Unemployment protection is available to qualifying members. If you lose your job involuntarily, you will be allowed to temporarily pause payments in three-month increments for up to 12 months over the life of the loan if you work with the SoFi career team to look for new employment.