Short answer: a debt consolidation loan helps if you can still afford to repay everything you owe and can qualify for a lower rate. A Fresh Start Plan helps if you can’t, because it lowers the amount you owe, not just the interest.

How a debt consolidation loan works

A lender gives you one new loan. You use it to pay off your credit cards. Then you repay the loan in fixed monthly payments, usually over two to five years. You still owe every dollar you borrowed. The savings come only from a lower interest rate.

That works well when your credit is still good. If you are already behind on your cards, most lenders will turn you down, or offer a rate close to what you pay now.

How a Fresh Start Plan works

We combine your credit card and other unsecured debt into one plan with one monthly amount. Our team negotiates with each creditor to accept less than the full balance. Every offer comes to you for approval before anything is settled. Most plans run 24 to 48 months.

Side by side

  • What you repay: loan, the full balance plus interest. Fresh Start Plan, a negotiated amount that is usually less than you owe.
  • Credit needed: loan, fair to good. Fresh Start Plan, none; it is built for people who are struggling.
  • Effect on credit score: loan, often neutral or positive if you pay on time. Fresh Start Plan, your score usually drops during the program.
  • Taxes: loan, none. Fresh Start Plan, forgiven debt may count as income; we explain this before you start.
  • Upfront cost: loan, possible origination fee. Fresh Start Plan, no upfront fees; we don’t get paid unless we settle.

Three questions to decide

  1. Are you current on every card? If yes, try for a consolidation loan first.
  2. Would the loan payment actually be lower than your minimums today? If not, the loan just moves the problem.
  3. Has something changed, like lost income, illness, a divorce or a business that closed? If yes, a Fresh Start Plan may be the more realistic path.

We will tell you plainly on the first call if a loan, a credit counselor or even bankruptcy would serve you better than our program.

Free call: (888) 514-1085 or text 718-766-5193. No upfront fees.

Results vary and are not guaranteed. Angels of Debt is not a lender. This article is general information, not legal or tax advice.