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If you’re struggling with debt like so many of us are, debt consolidation might be able to help you pay off that debt faster. If you’re not sure how it works or if it’s worth it, we’re going to give you the facts to help you decide.

Debt consolidation is not the same as bankruptcy. Consolidation does not erase or eliminate any debt. Consolidation means that you take your existing debt and combine it into one loan and one payment. You still have to repay it, but instead of paying multiple creditors interest each month you’ll only be paying one. Plus, it makes that dreadful task of bill paying much easier too. You only have one bill to cover all of that debt.

All of your debt may not be eligible for consolidation so it’s not likely that you can consolidate every one of your bills. To some people this makes debt consolidation seem less attractive because they will still have multiple bills so why should they? Even if you’re only able to consolidate two of your major debts that still eliminates one payment and the interest that comes along with it. That still saves you money so in the end we think it is worth it!

If you have good credit you may qualify for a great rate which can save you even more in interest. Even if you have poor credit you are still only paying one bill and one interest payment so it’s still less than multiple good rates.

One thing to know is that a debt consolidation loan is essentially a personal loan. You will have better chances of being approved if you have collateral to provide to get a secured loan. You will also likely have a lower interest rate with a secured loan that an unsecured loan. On the other hand, an unsecured personal loan doesn’t put you at risk of losing anything valuable if you default, but you’re likely to have a harder time getting approved and you will probably pay higher interest.

One of the biggest myths about debt consolidation loans is that they are a scam. While there certainly have been scams related to debt consolidation, it is a legitimate and effective way to reduce debt. This myth was sparked around 2008 with the Great Recession. Scams popped up left and right hoping to lure in people that were suddenly indebted and didn’t know what to do. The best thing you can do is to do your homework on the lender you’re interested in speaking to.

Debt consolidation doesn’t have to be through an actual debt consolidation loan. You can use funds from a home equity loan or line of credit. You can also take out an actual personal loan. Research these types of loans as well to see if any of them might be better for you. If you’re overwhelmed by information and not sure who to ask, reach out to your bank and they will put you in touch with a lending specialist to help you choose the right type of loan.

There may be fees associated with a consolidation loan, so make sure you get all of the details and speak to a lending specialist at your financial institution for help.

If you have so much debt that it is completely unmanageable and you can’t possibly repay it, bankruptcy might be your best option. Hopefully you’re not there yet! Debt consolidation can help save you from getting to that point.

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Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1-800-692-6279 or email [email protected]. Member FDIC. Equal credit opportunity lender.