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What is debt consolidation? Will it work for me?


The definition of "debt consolidation" depends on who it is saying those words. It either means Chapter 13 bankruptcy, or a service that makes arrangements with your creditors to pay your debts for you.

There are private debt consolidation services popping up all over the place. In my opinion, most of them can not do what they claim to be able to. For more discussion about private debt consolidation service, see the FAQ Should I go to a credit counselor or a debt consolidation service?

If you see a TV commercial or an advertisement from a lawyer that mentions "debt consolidation," they are really talking about Chapter 13, or "wage earner." They use the words "debt consolidation" because they know that some people are afraid of bankruptcy, and they want you to think that they might not be talking about bankruptcy. If the ad mentions federal law, or stopping foreclosures or garnishments, they are really talking about Chapter 13. For more discussion about Chapter 13, see the FAQ What is the difference between Chapter 7 and Chapter 13?