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If you’re having a challenging time juggling your bills, you’re not alone. According to the U.S. Bureau of Labor Statistics, the average expenditure of a U.S. household was $61,334 annually. Of those bills, 9 of the 14 major expenditures rose in 2020 and continue to rise. With the rise in costs, people are looking for helpful ways to cut and consolidate bills. However, finding the best way to consolidate your bills isn’t easy.

Image source: Nick Youngson CC BY-SA 3.0 Pix4free

Does Bill Consolidation Work?

Bill consolidation works as long as you don’t use the opportunity to spend more money. When you consolidate bills, you group enough of your bills together to make payments more manageable. Rather than working with different creditors, varying interests rates, and due dates, bill consolidation organizes it all into one fixed monthly payment, as you’ll learn at https://www.bills.com.

Step One: Start to Consolidate Bills

To consolidate bills, you must know the extent of your debt and how much income you have to meet those payments. You’ll have to list your credit cards, loans, and understand what their interest rates are. In addition, you’ll identify your sources of income and compare them to your monthly payments.

Step Two: Choose a Debt-Relief Option

Fortunately, there exists a variety of options to help you consolidate bills. The challenging part is choosing the right one for your situation. The following are the most common options for bill consolidation.

Balance Transfer Credit Card

A balance transfer credit card is a great choice for someone with a small amount of debt on high-interest credit cards. Credit cards with high interest rates can quickly drown you in balances if you’re not extremely careful. Data shows that 98% of credit cards charge hefty late fees and penalties. Using a balance transfer card to lower interest rates and make payments manageable work to consolidate bills from credit cards.

Bill Consolidation Loan

A bill consolidation loan is typically a personal loan from a bank. After taking out the bill consolidation loan, you would use the money to pay off the balance for credit card bills or other high-interest loans. The interest rates for bill consolidation loans rely on your credit score and you must meet the lenders qualifications.

Personal Loan from Friends and Family Members

Most people choose not to borrow money from friends or family members because it can risk relationships if things go south. That said, a personal loan from someone you know is an affordable way to help consolidate bills, especially if your credit is less than perfect. Making the loan more formal — by creating a promissory note, repayment plan, and even an interest rate — can help to make borrowing less from friends or family less awkward.

Home Equity Loan

If you own a home, you might have the option of using it to consolidate bills. A home equity loan uses your home as collateral for a loan. What makes home equity loans appealing are their interest rates, as they’re typically lower than those used for credit cards and car loans. Before looking into a home equity loan, however, you should know that defaulting could result in home foreclosure.

Debt Management Program

A debt management program is not a loan and you don’t need to put up your home as collateral. Rather, a debt management program helps your assess your finances, create a budget, and help you determine how to pay off your debt in a reasonable amount of time. Credit counselors answer your questions about the program and reach out to your creditors for you. The debt management program works with you to devise an affordable monthly payment, and they disburse these funds to pay your bills.

The Final Step: Making it Happen

Choosing a path to consolidate bills is a big step, but you don’t have to do it alone. If you’re looking for debt relief, Bills.com can answer your questions and help you choose the best way to consolidate your bills.


Sometimes in life, there are moments when you cannot pay off your debts on your own, no matter what you do. Fortunately, modern Debt Stop services help people deal with overwhelming duties and offer convenient plans and strategies. If you are ready to seek help from such specialists, study what consequences it may have on your credit history.

Debt Relief Plans

There is no one-size-fits-all solution that suits every client. That is why companies develop plans to alleviate the financial burden on a case-by-case basis. Among these methods are the following:

  • Debt settlement. In the course of negotiations, lending institutions usually agree to forgive the borrower for the debt part.
  • Debt management provides a review of the payment plan and terms to help you better control your finances.
  • Debt consolidation. As part of this strategy, all existing debts are combined into one. In the long run, you will be able to save on interest.
  • Bankruptcy. If your debt situation is complicated, you can declare yourself bankrupt through court. As a result, this procedure can reduce or completely save you from part of the debts.

The professionals who deal with your issue should carefully check your documents and history to find a solution that does not harm you even more in the future.

Debt Relief Consequences

Do not think that by using a debt relief program, you will irreversibly ruin your credit history. Typically, when you can’t pay off your debts, your score isn’t perfect anymore. Choosing the right plan that will ease your financial burden will be the best decision. However, each of the listed strategies has its pros and cons.

Debt settlement

Usually, debt settlement is ranked one of the first in terms of the potential harm to your credit history. Typically, payments are suspended when negotiations are underway between the lender and the firm settling your debts. It means your credit score goes down when you miss one or more scheduled payments.

Debt management

This option is a much softer solution to the debt issue. In this case, you do not refuse payments but only revise the conditions. The debt management program will not negatively affect your score as long as you make the agreed payments on time.

Debt consolidation

The impact of this strategy directly depends on your actions. If you request another loan to pay off after combining all debts into a single payment, it will trigger an in-depth investigation by the new lender. Also, you should not skip regular payments and not take on new debts until you resolve the issue with those that already exist.


Bankruptcy has a long-term impact on your credit score (over 7-10 years, depending on the case). It can lower your chances of getting new credit, holding certain jobs, renting an apartment, or increase car insurance in the future.

Choose Reliable Debt Relief Company

The inability to pay off debts is a difficult situation both from a financial and psychological point of view. Choose a reliable company that will carefully analyze your history and pick the optimal action plan to minimize possible consequences.

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“Our innovative program will make all of your debt disappear in just a few months for pennies on the dollar. We’ll also stop all collection calls and lawsuits. This guaranteed method is sponsored by the US Consumer Financial Protection Board to help people get relief from COVID-19 related financial woes. Just send us $49.95 and we’ll get right to work for you.”

Each one of the four sentences above contains clues the paragraph is promoting a scam.  Here’s what you can learn from them to help you get better at recognizing debt settlement scams.

Certain Debts are Immune to Settlement

Unsecured debts such as personal loans, credit card debt and even medical debt can be negotiated and settled. However, secured debts, such as car loans, mortgages, boat and motorcycle loans are ineligible.

This is because the lender can repossess whatever asset was used to secure the loan if you can’t make your payments — thus the term “secured debt”. However, public student loans, alimony and child support are also immune to debt settlement.

Thus, anyone saying they can make all of your debt disappear is lying — and operating in violation of the law. 

There Are No Guarantees

One of the first things any legitimate debt relief  company will tell you is there are no guarantees. This is because every situation is different and therefore negotiated on a case-by-case basis.

What worked for one person might not work for another. Thus, anyone guaranteeing positive debt settlement results is lying — and operating in violation of the law.

Government Entities Aren’t Involved 

OK, well that one isn’t entirely accurate. The Federal Trade Commission does keep an eye on the debt settlement industry to make sure companies offering debt relief are on the up and up. The same is true for your state attorney’s general office and your local consumer protection agency.

However, no government organization promotes debt settlement. Nor do any of them offer debt settlement services. Anyone claiming to be working with any branch of government to settle debt is lying — and operating in violation of the law.

Upfront Fees Are Not Permitted

As part of its effort to protect consumers, the FTC has decreed debt settlement firms can only exact fees after they’ve settled debts on a consumer’s behalf.

Yes, you will be required to set cash aside to fund your settlement agreements as they are reached. However, that money is only to be used to fulfill the arrangements your creditors offer.

Any other use of that money is prohibited. Therefore, anyone saying you need to give them money before they’ve settled one of your debts is lying — and operating in violation of the law.

Creditors Will Still Make Inquiries

One of the premises of debt settlement is you’ll stop making payments to your creditors and instead deposit that money into an escrow account to be used to fund your settlement deals.

So you’d best believe your phone is going to ring when those bills go unpaid.

Yes, you can tell your creditors you’re working with a debt settlement program and they should get in touch with your agent there. However, that cannot stop them from calling you just the same. Anyone who says they can is lying — and yes — operating in violation of the law.

Recognizing debt settlement scams is relatively simple when you bear in mind the old adage; “If it sounds too good to be true — it probably is.” Don’t let desperation be a motivator, keep your wits about you. Understand that just as it took time for the debt situation to develop, unwinding it is going to take time too and you will come out of the situation OK.