Best Debt Consolidation Loans | Unsecured and Low Interest Rates

Best Debt Consolidation Loans

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Updated: 04/19/18

Many people won’t think twice about buying a different brand of yogurt to save a few dollars, but they might not think to consolidate their debt in order to save hundreds or even thousands of dollars in interest and lower their payments. A debt consolidation loan is essentially a loan that you take out in order to pay off other loans that are higher in interest. You can use some of the best debt consolidation loans to pay off any kind of debt, but most people use them to pay off high interest personal loans, auto loans, or credit cards.

A debt consolidation loan can make sense if you’re using it to pay off types of credit that tend to have higher interest rates like credit cards. But it can also make sense if interest rates suddenly fall or if your credit score or income improve and you can suddenly qualify for a lower rate.

The process for getting the best debt consolidation loans can be relatively easy since you can now apply for them online with a quick application. Since almost all debt consolidation loans don’t require collateral, getting one can also be particularly beneficial if your current debt is secured to your home or your car and you no longer want it to be, or if you need to sell one of those assets.

Top Debt Consolidation Lenders


Estimated APR

5.21% - 14.24%

Available Terms

3 to 7 years

Min. Credit Score


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Estimated APR

4.99% - 16.24%

Available Terms

3 to 7 years

Min. Credit Score


using LendEDU's secure

comparison tool


Estimated APR

5.99% - 36.00%

Available Terms

3 or 5 years

Min. Credit Score


using LendEDU's secure

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Take the guesswork out of debt consolidation.

Get real quotes in 2 minutes without affecting your credit.

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upstart personal loans

Estimated APR

8.69% - 29.99%

Available Terms

3 or 5 years

Min. Credit Score


using LendEDU's secure

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Estimated APR

5.99% - 35.89%

Available Terms

3 to 5 years

Min. Credit Score


using LendEDU's secure

comparison tool

payoff logo

Estimated APR

8.00% - 25.00%

Available Terms

2 to 5 years

Min. Credit Score


using LendEDU's secure

comparison tool

Best Debt Consolidation Lenders

Lending Club

Lending Club is an online lender that allows you to consolidate between $1,000 and $40,000 in credit card or other debt through a debt consolidation loan. Since it deposits your money directly in your bank account, you can use it to pay off any kind of debt.

It offers a quick online application, and you can get funding within less than a week. Term lengths range from three to five years, and APRs range between 5.99% and 35.89% depending on your personal financial and credit situation. There is a 1% to 6% origination fee involved in your consolidation loan, plus fixed-rate loans.

Lending Club requires that borrowers have a minimum credit score of 600 and three years of credit history to apply.

The benefits of using Lending Club are that the minimum credit score is lower than other lenders and the rates can be low if you have good credit. If you don’t have good credit, however, you could pay a very high rate.



Prosper is an online lender that allows you to consolidate between $2,000 and $40,000 in debt via a debt consolidation loan. It sends the funds directly to your bank account, which allows you to use them to pay off any loans you have.

You can apply via a quick online application and get approved within one to three business days. Term lengths vary between three to five years, and APRs are fixed and between 5.99% and 35.99%. It also charges an origination fee of between 1 percent and 5 percent of your loan. Their interest rates are all fixed which means that they won’t go up over the life of your loan.

Prosper has a minimum credit score requirement of 640, but the average credit score of its borrowers is 710. There is no minimum income to apply.

The benefit of a Prosper loan is that it can get approved very quickly and the rates are fixed. The downsides are that the highest rate is expensive and it doesn’t allow you to borrow as much as other lenders.


upstart personal loans

Upstart is an online lender that allows you to borrow between $1,000 and $50,000 to consolidate debt. It will deposit your funds directly in your bank account, allowing you to pay off any kind of debt.

To apply, you just need to fill out a quick application, which can typically get approved and funded within one day. It offers three- and five-year term lengths and APRs from 7.73% to 29.9%. It also charges an origination fee of zero percent to 8 percent. The average loan has an APR of 14.86%.

Upstart uses your credit score if it is over 620 to make credit decisions, but may also use alternative underwriting criteria if your credit score is below 620 or if you don’t have a credit score. It takes things like your education, income, and employment into account instead. You have to have at least $12,000 in income from a job or an offer letter.

The big benefit of Upstart is that it considers alternative lending criteria when deciding whether to lend to you and setting your rate. The downside is that the lowest rates are higher than those of competitors.


SoFi Logo

SoFi is an online lender that allows you to borrow between $5,000 and $100,000 to consolidate your debts. Since it deposits the money directly in your bank account, you can use the funds to pay off any kind of debt.

In order to apply, you have to fill out an easy online application and it typically takes seven days for your loan to get approved. It charges fixed APRs of between 5.49% and 14.24%. There are no origination fees.

SoFi requires a credit score over 660, but the average credit score of borrowers is 700. It also requires that you have a high income, about $101,000 on average. For that reason, SoFi is likely better for borrowers who have excellent credit.

The benefits of borrowing from SoFi are that you can potentially borrow a very large amount of money since the maximum loan is $100,000 – and it offers very low rates. The downside is that you likely need to have a high income to qualify.


payoff logo

Payoff is an online lender that allows you to use a fixed-rate loan to consolidate your debts. It offers loans between $5,000 and $35,000. Since the money goes directly into your bank account, you can choose which kinds of debt you want to consolidate.

The lender has a quick online application and you’ll find out within one to seven days if you’re approved. Loan rates start at 8% APR and go up to 25% APR. It charges an origination fee of between 2 percent and 5 percent.

It requires a minimum credit score of 640. It also offers tools to keep you on track on your loan repayment.

A major benefit of Payoff is that it provides assistance to help you get your finances in order. The downside is that it requires a higher minimum credit score.

Citizens Bank


Citizens Bank is a bank that that offers debt consolidation loans between $5,000 and $50,000. The money goes directly into your bank account so you can pay off any kind of loan.

Its loans have a quick online application that takes two minutes, and you’ll hear back within a few days. The loans have term lengths of between three to seven years, and fixed APRs that range between 6.99% and 15.50%. There are no origination fees.

Borrowers must have a strong credit history and a minimum income of $24,000 in order to apply.

The upside of Citizen Bank is that its highest rate is relatively low and so is the minimum income. The downside is that their lowest rate is higher than their competitors so it’s not the best bet if you have good credit.

Finding Out If Debt Consolidation is Right for You

When Does Debt Consolidation Make Sense?

A debt consolidation loan can be a good idea if you qualify for a lower interest rate loan than you are currently paying on your other debt. In that case, you save money by immediately reducing your interest rate and your monthly payment. You can then use the extra money that your reduced payment frees up to make additional payments toward your debt in order to pay it off faster – or use that money for other expenses. A debt consolidation loan can save you as much as hundreds or even thousands of dollars over the life of the loan.

You can also change the term lengths of your loans when you get one of the best debt consolidation loans in order to further reduce your monthly payment if you are struggling to pay your bills. While that could mean you’ll end up paying more in interest over the life of your loan, the lower interest rate that you might qualify for can offset some of that.

When consolidating loans for this reason, this might be the last resort for people who are struggling with debt before considering options like bankruptcy and debt settlements, which have a lasting impact on your credit. But debt consolidation can also be a great strategy to ensure that you don’t default on your loans or make late payments, which will also hurt your credit score.

The best debt consolidation loans will also simplify your bill payments by giving you just one payment to worry about and keep track of every month.

Is Debt Consolidation Right for You?

Whether or not a debt consolidation loan is right for you will depend on a few factors. The first and most important factor is your credit score. In order to qualify for a consolidation loan at an interest rate that’s lower than what you’re paying on your other debt, you’ll likely need a fairly high credit score.

But how high your credit score will need to be to enable you to qualify for a debt consolidation loan at a good rate will depend on a number of factors such as the lender, your financial situation, your credit situation, and the type of debt you’re refinancing. For example, if you have credit card debt that is charging you 29% APR, you might still be able to qualify for a consolidation loan that charges you much less even if you have bad credit.

However, if you’re refinancing a personal loan that is charging you 9% APR and you have bad credit, you might not be able to get a lower interest rate than what you’re currently paying. This could be especially true if your debt is mostly in personal loans or auto loans, as these tend to already offer low rates. If your debt is secured debt, it can also be harder to get a consolidation loan at a lower rate than what you’re currently paying.

Your income is also a factor in whether you should consolidate your debt. How much you make will impact how much you can borrow and what rate a lender will offer you. The higher your income, the lower your rate and the more you’ll likely be able to borrow. For that reason, it might make sense to consolidate your debt before making a change from working full-time for an employer to freelancing or starting your own business – since you’ll likely struggle to qualify for a loan if you’re self-employed and you don’t have the minimum of two years of steady income from freelancing that lenders prefer to see.

Unfortunately, if you don’t have a great credit score or a high income, you’re more likely to need the savings that consolidating your loans could give you – but it’s more difficult for you to do. Many of the best debt consolidation loans allow you to have a cosigner, so if you know someone who has good credit, a steady job, and is willing to cosign for you, then you might want to allow them to do so. You’ll then be evaluated based on your cosigner’s credit and income instead of your own. A big downside to this is that if you are unable to pay your consolidation loan, your cosigner will be responsible for it.

Another factor to think about is whether the debt consolidation loan you’re considering has a variable or fixed interest rate. Variable interest rates tend to be lower, but they can increase if the interest rates go up or decrease if they go down. Given that interest rates are currently pretty low, that means that over the course of your five- or 10-year consolidation loan, your APR could increase significantly and negate the few percent in interest that you would have saved by refinancing. In fact, you could end up paying more. If you plan on consolidating your loans, it’s likely better to choose a fixed-rate loan so that you can lock in a low rate and maintain consistent payments.

Another factor to weigh is whether the debt consolidation loan you’re considering will charge you origination fees or other fees that could cut into your savings. After all, if you were going to get a consolidation loan in order to save 3 percent in interest, but the loan you’re considering also charges a 3 percent origination fee, you won’t come out ahead. Similarly, if the loan charges you a prepayment fee then that will add other expenses if you want to pay off your loan before the end of the term length. That’s why it’s important to look into all the fine print before deciding whether or not to choose a particular debt consolidation loan.

Ready to compare your debt consolidation options? Click here.

Types of Debt Consolidation Loans

Some of the best debt consolidation loans are applicable to any kind of debt and simply deposit the funds into your bank account. But there are also certain loans that are targeted to helping you pay off particular kinds of debt.

Consolidating Credit Card Debt

Some debt consolidation loans are specifically created to consolidate credit card debt. They often make financial sense because of the high interest rates that credit cards charge in comparison to the best credit card consolidation loans.

For example, if you currently have $10,000 in credit card debt and are being charged 25% APR and repay that debt in five years, you will pay $294 per month and $7,583 in interest. If however, you can consolidate that debt at a rate of 5%, you will pay only $189 per month and just $1,320 in interest. If you can consolidate that debt at 10% interest, you will pay $212 per month and just $2,757 in interest. Even if you have to pay 15% in interest, you would still only pay $237 per month and $4,271 in interest. As you can see, the savings are significant.

Getting a debt consolidation loan also helps you stay focused on paying off your debt. With credit cards, all you have to pay is the minimum payment and once you pay off part of your balance you can charge more purchases onto your card since it is a revolving form of debt. For some people, this creates a cycle in which they’re constantly charging new things on their cards and not on their way to being debt-free.

But with a debt consolidation, loan you lock yourself into a term length where you commit to paying off the full amount of your debt over a period of anywhere from two to over 10 years or more. That will allow you to stay motivated on your debt repayment because it will give you a sense of accountability.

Another big benefit of a debt consolidation loan over a credit card is that you can choose a fixed interest rate. Credit cards have variable interest rates, which means that they can go up and down along with fluctuations in the prime interest rate. But if you get a fixed rate debt consolidation loan, you can lock in a low interest rate. Given that interest rates are currently low, they’re likely to go up in the future, so locking in a fixed rate now is a good plan.

Consolidating Medical Debt

Another common kind of debt consolidation loan is a medical debt consolidation loan. When you have an urgent medical need, you’re often desperate to get the money to pay off your medical bills before they go into collections. And you might not have spent time searching for the best interest rate – or had the capacity to do so if you or a loved one were seriously ill.

For that reason, you might have chosen the first loan offered to you and could be paying more than you need to on your medical loans. Or maybe you were unemployed or had bad credit when you had to pay your medical bills, and now you’ve improved your personal credit and financial situation. This is common since many people can’t work when they are sick.

In that case, a medical consolidation loan is a great way to reduce your interest rate or change the term length of your loan. This can help you pay it off more quickly or make your payments more manageable.

Debt Consolidation vs. a Balance Transfer Credit Card

While consolidating your debt with a debt consolidation loan is one easy way to fast-track your debt repayment, another common method is to get a credit card that has a 0% introductory interest rate and transfer your credit card balance to that card. This could be a good option if you can qualify for the credit card as you won’t have to pay interest on your debt for the introductory period. You will, however, often have to pay a balance transfer fee, which is usually between 3% and 4% of the total cost of your debt. This amount gets tacked onto your credit card balance.

Whether a 0% introductory rate credit card ends up being a better choice for you than a debt consolidation loan will depend on your personal financial and credit situation, as well as the interest rate you’ll be able to qualify for.

It will also depend on the length of the introductory rate. If it’s six to eight months, it might not make sense to pay the balance transfer fee compared to taking out a debt consolidation loan which, if you have a good credit score, could start as low as 5% APR. However, if the introductory period on a balance transfer credit card is 12 to 18 months, it could make sense to do so. The important thing to remember is that after the introductory period is over, you will have to start paying interest at the card’s regular variable interest rate, which will likely be much more expensive than one of the best debt consolidation loans.

For that reason, it’s important that you have a plan for what you’ll do when the introductory period is over if you don’t think you’ll have your debt completely paid off by that point. You could get another 0% introductory interest rate card and transfer your balance onto that, or you could decide to take out a debt consolidation loan at that time.

If your financial or credit situation has worsened since you originally transferred your debt, however, you might not qualify for the same rates and you could end up paying more. The benefit of the best debt consolidation loans is that you can lock in a low rate if you get a fixed-interest loan.

Secured vs. Unsecured Debt Consolidation Loans

When shopping for the best debt consolidation loans, it’s important that you realize that there are both secured and unsecured loans available. A secured loan is one that is guaranteed by an asset. This can be your home, a car, your savings account, or certificate of deposit. If you fail to make your payments on your debt consolidation loan, your lender can seize your asset in order to get its money back. In contrast, an unsecured loan is not secured by an asset.

The benefit of a secured loan is that you will likely qualify for a lower rate with a secured loan. That’s because there is less risk for the lender, which means you can get a lower interest rate. With an unsecured loan, you might pay slightly more but you won’t have to worry about an asset getting seized – at least in the immediate future – if you fail to make your payments.

Which type of loan is right for you will depend on your personal financial situation. If you’re struggling to make your payments and are getting a debt consolidation loan for that reason, it’s likely not a good idea to get a secured loan since you’re more likely to continue to struggle with your payments and potentially have your collateral seized. However, if you’re just trying to get out of debt faster by reducing your interest rate, it might make sense to get a secured loan since that can help you get a lower rate.

The important thing to remember is that very few debt consolidation loans are secured. And one benefit of a consolidation loan is that you can use such loans to pay off secured debt. For example, you might decide to use a debt consolidation loan to pay off your auto loans or your home equity line of credit so that your home and car aren’t at risk if you are unable to make your payments.

Ready to compare your debt consolidation options? Click here.

Shopping for the Best Debt Consolidation Loan

How to Compare Your Options

When it comes to the best debt consolidation loans, there are a number of options to choose from. Many banks and credit unions offer debt consolidation loans, and many online lenders also offer these types of loans. Some lenders that don’t offer debt consolidation loans specifically offer personal loans to consolidate your debt. The lender that is right for you will depend on your personal financial and credit situation.

If you have excellent credit, you’ll likely have your pick of lenders, but you might not want to just choose the one that offers the lowest rate. First, consider whether they’ll give you a variable- or fixed-rate loan and what kind of term lengths they’ll offer. You might decide that having a longer term length is more important than saving a half-percentage point in interest.

You’ll also want to know what kinds of fees will be charged. Things like origination fees, document fees, or prepayment fees add costs to your loan and could mean that you’ll pay more than if you chose a loan with a slightly higher interest rate. Some lenders also offer discounts if you sign up for auto-debit on your loans, so be sure to look into that.

If your credit score is below 700 or 600, it will be more difficult to find a lender since some lenders have cutoffs around those ranges. You might need to seek out lenders who specialize in lending to people who have average or bad credit. You’ll pay more in interest, but you should also be more careful in reading the fine print on these loans. Many lenders that specialize in lending to people with bad credit add on fees that could cause the costs of the loan to skyrocket. It’s important therefore to not just look at the interest rate charged, but to look at the APR, which should include all fees related to the loan. That will make comparing a loan from one lender to another much easier.

When it comes to choosing the right loan, it’s important to shop around. The more quotes that you can get from different lenders the better. One way to compare lenders is to use an online loan marketplace. These websites allow you to fill out just one application and get a number of quotes from different lenders that you can compare. This can save you time and make it easier for you to see differences between loan offers so you can decide which one is right for you. Once you decide on the lender you want, you can fill out a complete application on their website.

What Interest Rates Should You Expect?

What you’ll pay in interest will depend significantly on your personal financial and credit situation. If you have ideal credit, you could end up paying as little as 4% to 5%. But if you get a low variable rate, which is linked to the prime rate, it can go up when the prime rate goes up.

If your credit is not ideal, you could end up paying much more. Debt consolidation loan rates can go as high as 30% or more depending on your credit. The average person with an average credit score will often pay something roughly in between those two rates.

Obviously, if you’re on the higher end of some of those ranges, it might not make sense for you to get a debt consolidation loan unless you desperately need to extend the term length of your loan for a lower monthly payment. But doing so could drastically increase the amount of interest you pay over the life of the loan.

Why You Should Look for Companies That Do Soft Credit Pulls

When you’re looking for any kind of loan, it’s important that you look for a company that does a soft credit pull in order to pre-qualify you as a borrower. A soft credit pull is when a company does an unofficial credit inquiry to get a general idea of your credit score. This gives them just enough information to determine whether how likely they are to lend to you and what kind of interest rates you’re likely to qualify for. This allows you to find out if they are a good fit as a lender without doing a hard credit pull.

A hard credit pull is when a company officially contacts one or more credit bureaus in order to find out your credit history. Some companies require a hard credit pull before they will give you a quote for a debt consolidation loan. A hard credit pull will be noted on your credit history. Every time you have a hard credit pull on your credit history, your credit score goes down a little.

That’s because credit bureaus believe that those who shop around for loans could be doing so because they’re experiencing financial distress. The more credit inquiries that you have on your record, the more your score will go down in the near term since the credit score algorithm is interpreting those inquiries as financial problems.

That’s why it’s better to apply to companies that do soft credit pulls. This can give you an idea of what kind of loan they’ll be able to offer you without it damaging your ability to qualify for loans from other lenders or your credit score. It will also allow you to compare your options with other companies.

Once you decide which company you want to borrow from, you’ll have to approve a hard credit pull on your account so that the lender can verify your score and finalize the loan offer, but then you will only have one inquiry rather than half a dozen.

Do Lenders Pay Off Your Loans Directly?

Many lenders offer you the choice to either get the money in a check or bank transfer or pay off your debt directly. What’s best for you will depend on your personal financial situation and how many types of debt you have. If you have multiple debts, it might be easier for you to pay off your debts directly rather than pass all the information to your lender.

But getting the money in the form of a check could tempt you to spend some of it. It’s important to remember why you’re getting the money in the first place, and that you pay off your debt as soon as the money hits your bank. After all, you don’t want to be paying interest on your consolidation loan and your other debts at the same time.

What to Look for in the Fine Print

The most important thing that you should pay attention to in the fine print is whether your debt consolidation loan charges fees. Origination fees can tack on anywhere from 1% to 4% to the cost of your loan. Some loans also charge you a prepayment fee that requires you to pay 3% to 5% extra if you repay your loan before it’s due. Even if you don’t think you’ll be repaying your loan more quickly, it’s a good idea to avoid loans with prepayment fees because you never know when you might suddenly decide you want to get out of debt and you don’t want to be penalized for it.

Another red flag to look out for are any penalties that you might incur if you pay your loan late. Those fees can add up.

Ready to compare your debt consolidation options? Click here.

Alternatives to Debt Consolidation

Many people turn to debt consolidation loans as a last resort because they’re struggling with their debt and need to reduce their monthly payments. For these people, the alternative to debt consolidation loans could be not being able to pay their bills. If you’re wondering if another option might be better for you – read on. We break down alternatives to help you understand the pros and cons of each.


Loan consolidation involves combining many loans or credit card debts into one loan, but you can also refinance your debt. Refinancing debt is when you replace one loan with another. Refinancing your debt is very similar to consolidating your debt except that if you have more than one type of debt, you will still have more than one bill. Otherwise, the same principles apply that you can potentially find a better interest rate and better terms by applying for a new loan.

Refinancing is also the language used to describe getting a loan at a lower rate to replace your student loans. If you want to lower the interest rate or change the term length on your student loans, you’re better off getting a student debt refinance loan than getting a debt consolidation loan since those loans can often offer extra benefits like the ability to defer your loans. You won’t, however, be able to discharge your refinanced student loans in bankruptcy, but you would be able to discharge a consolidation loan.

The benefits of refinancing are that you can get a lower interest rate, or extend your repayment terms and reduce your monthly payment. This makes it easier to pay your loans every month and could mean you’re less likely to default on your loans. The downside is that this might not be enough for you to save your finances if you find yourself drowning in debt and unable to pay. It also requires that you qualify for refinancing your loans, which might be difficult if you’re in financial distress.

Debt Settlement

If you’re unable to pay your debt, you might want to try to negotiate a debt settlement with your creditors. This is what happens when a creditor agrees to reduce your debt balance in order to make it easier to for you pay off your debt.

Wondering why a creditor would do this? They don’t like to, but they are willing to consider it if you can prove that you’re in financial distress and will likely default on your debt if you are unable to come to a settlement. Lenders are often afraid that you could apply for bankruptcy and have the debt erased, so they are often eager to make a deal in order to get something from you – rather than nothing.

Generally, debt settlement agreements are negotiated by debt settlement companies that convince the lender to accept a lower amount. The debtor then gives the company their payments every month, and that company takes a portion as payment and passes the rest on to the lender. Sometimes debtors are required to make lump-sum payments as part of their debt settlement, too.

The upside of debt settlement is that you can potentially avoid bankruptcy, which would decimate your credit score and lead to other financial challenges such as the need to liquidate current assets.

But there are a lot of downsides to debt settlement. The first is that your credit rating will likely go down significantly anyway. While it typically won’t be as damaging to your score as a bankruptcy, it will still be significant and this will stay on your credit history for seven years. Also, many consumers have faced problems with debt settlement companies not passing along funds to the lenders – or charging too much. Debt management is often seen as a similar and better solution.

Debt Management

If you’re not able to consolidate your debts, you might want to apply for a debt management in order to avoid bankruptcy. Debt management involves working with financial counselors to follow a debt repayment strategy to help you get out of debt as quickly as possible. The counselor works with the person in debt to come up with strategies to best manage the debt –including budgeting, reducing expenses, and finding ways to make more money.

They give debtors a strategy that includes paying off debt on higher interest rate cards first to speed up repayment. The debtor starts to follow the plan, and the advisor works with them. They might also help you consolidate your debt payments into one payment that they then divide between your creditors, helping you reduce or eliminate your penalty fees.

The benefits of using a debt management plan are that it is often less expensive and less harmful to your credit than using a debt settlement to deal with your debt. After all, if you’re able to get your expenses under control, you might actually be able to make all the payments on your cards. But they also help you by teaching you smart financial strategies that will help you in the long run, such as budgeting.

The downside is that it might not be enough to save you if you have significant amounts of debt, with no way to decrease your expenses or increase your income in order to pay off debt more quickly.


The last resort if you’re in an extreme amount of debt is often bankruptcy. This is what many people resort to when their debts are too overwhelming and they’ve tried everything else. Essentially, you go to court to get help discharging debt or repaying creditors. There are a few types of bankruptcy proceedings, but the most common ones for individuals are Chapter 7 and Chapter 13 bankruptcies.

Chapter 7 bankruptcies involve liquidating your property. Your assets can be seized and sold to pay off debt, however you may get to keep things like your personal belongings, your car, and your clothes.

With secured debt, you’ll have a choice to either continue making payments on the debt, pay a sum equal to the replacement value of the property, or allow the creditor to repossess the property.

You are eligible for Chapter 7 bankruptcy as long as you don’t make enough money to fund a Chapter 13 bankruptcy repayment plan. Also, it’s important to note that things like student loans, taxes, child support, and alimony are not debts that can be dealt with through bankruptcy. Student loans can only be discharged if you can prove extreme hardship, which means that you’re likely to never pay them back.

A Chapter 13 bankruptcy is when you have a reliable source of income and you work with the court to come up with a repayment plan and stick to that plan over the next three to five years. The amount that you pay toward your debt is based on how much you make, how much you owe, and what kind of debt you have. You might be able to repay secured debts via Chapter 13 without having to give up the asset that secures the debt.

The benefits of bankruptcy are that you can get a fresh start and potentially have many of your debts erased. But in order to do so, you will have to surrender most of your assets and you’ll have a bankruptcy on your credit report for seven years. That will significantly impact your credit and make it difficult to borrow or significantly raise your borrowing costs. Bankruptcy is best used only as a last resort.

Ready to compare your debt consolidation options? Click here.