What Type Of Debts Qualify For A
Debt Consolidation Solutions Program?
The general rule of thumb is that only
unsecured debt can be included in a Debt
By definition, unsecured debt is any debt that is not tied
to a major collateral.
In other words, anything that can be repossessed
(Car, Home, Boat, ect.) would not
qualify for any debt consolidation
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Type of debts that are Acceptable
for Debt Consolidation:
All Credit Cards
(Regular, Store Cards, Gasoline Cards)
Credit card debt is the
most popular type of debt accepted in Debt
Any Unsecured (Signature)
These are primarily personal loans also referred to as
signature loans. There is no
collateral securing this type of loan.
In some cases the lender may have the applicant submit a list of
in order to receive such a loan. This is just a
scare tactic lenders use to make the
applicant think that they will
come an repossess their furniture, appliances, ect.
That will not happen! This is not a secured loan
and can be included.
What About a Personal
Loan from a Friend or Relative?
That can be included, but it
will be up to the person who lent the money to accept
or decline the
proposal from the consolidation agency.
With traditional lenders, a
reputable consolidation company has agreements in
should know based on the consumers situation, if a creditor will accept
their proposal as opposed to a friend or relative that loaned them
the money and can
either accept or decline. It is recommended that
the consumer consults the friend of
family member before submitting
to debt consolidation agency.
Most government student loans are very low interest. Unfortunately the
does not negotiate.
They will accept a student loan
into a consolidation program, but the payment and
remain the same.
So why include a student loan? For most
consumers it's the convenience of one
monthly payment for all
creditors that attracts them to a consolidation program.
advice is to go ahead and include all student loans. But if most of the
consumers debt consists of only school loans, there are special
consolidate student loans.
Closed Utility Bills
Consumers may include any utility bill (gas, electric, phone, cable
ect.) only if the
account is closed and they are not using the
service of that utility company.
Usually these type of accounts are
from previous residences.
Any account that is in collections can be consolidated. There is usually
exception to the rule.
All Repossession Accounts
If a consumer owes a balance on any account that was defaulted on and
collateral (car, property, boat, ect.) was repossessed, the
collateral no longer
exists and the debt can be consolidated.
medical bills can be consolidated.
Any Other Unsecured Debt
With No Collateral
If you are unsure if a certain debt
qualifies, ask your consultant or contact us with
There are a few other things
consumers should be aware of when applying for debt
Unlike bankruptcy, consumers may choose the accounts that they want to
and the accounts that they want to keep out of the program.
In other words, you don't
have to consolidate every debt you
The reason it's important to know
this is because the creditors require that all revolving
credits cards) to be closed when accepted into a debt consolidation program.
This only makes sense since the goal of Debt Consolidation is to
eliminate debt, and the
first step in achieving this goal is to stop
A few things to know about American
Express, Credit Unions and Checking Accounts:
a consumer has an American Express credit card, it's advised to include
it in a
consolidation program. The reason is that American Express
is the only creditor
that conducts regular credit checks on all
their clients. If an account is excluded,
American Express will
eventually find out that the consumer in a consolidation
and take away their charging privileges.
On the other hand, if a
consumer completes the program without late payments,
Express will eliminate their interest.
a consumer has a loan or credit card with any Credit Union, they may
consider keeping them out of Debt Consolidation. Most
Credit Unions are a privilege
and carry a much lower interest rate
than other creditors. Many consumers
that use Credit Unions have
additional accounts with them such as Insurance
Checking Accounts. If they consolidate a credit card or loan from a
Union, they may lose all other accounts or policies
associated with that lender.
If a consumer has a credit card and checking account with one bank,
card may be used as overdraft protection for the
checking account. In a case as
such, they should close out the
checking account and reopen with a different bank.
the credit card is accepted into a consolidation program, they may
loose the checking account.
Type of debts that are Not
Acceptable for Debt Consolidation:
associated with child support, this is when the employer garnishes a
part of the wage as ordered by the Courts.
one can change the outcome of a Court Order.
All Judgments and Court
Payday Loans or Advances
(unless in collections
Rent To Own
pertains to furniture and appliances that are rented with the option
like any real estate, this is a secured debt.
Current (Open) Utility
and Phone Bills
may only include utility bills (gas, electric, phone, cable ect.)
if that account is closed and they are no longer using the service of
Any Type of Tax or IRS
ordered, no exceptions.
Consumers may not include any account that solely a business
the individual) is responsible for.
Any Secured Debt Tied To
A Major Collateral
words, anything that can be repossessed (Car, Home, Boat, ect.)
would not qualify for any debt consolidation program.
If you are unsure if a certain debt
qualifies, you may ask your consultant or contact us
with the question.
Some Do's and
Do make sure that you close all
revolving charge accounts yourself when
entering into a consolidation
See for more details.
Do not charge up your credit
cards before applying for debt consolidation.
Do not make balance transfers
before applying for debt consolidation.
A note from the author;
These Debt Consolidation laws are
created and governed by the creditors. Only the
creditors may change them.
If a Debt Consolidation agency ever tries to convince a
anything other than what is outlined in this report, they are not the
of agency that a consumer should get involved with. Detailed information about
choosing the right agency to consolidate debt can be found here.
Senior Financial Consultant
Consolidate Debt The Federal Reserve US says consumer
debt has risen to a staggering $876.2 billion. How can Debt Consolidation help
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