How to Consolidate Collection Debts and Garnishments

Outstanding financial obligations, such as collection debts and garnishments, can be consolidated and managed successfully with a debt-consolidation loan. Debt consolidation reduces the number of debts owed and eliminates high interest rates associated with many debts. You can make one monthly payment at a lower interest rate, as opposed to making several payments each month. Several types of loans are available. Home-equity loans usually charge the lowest interest rates, but you might consider a personal loan if you don't want your house used as collateral. Shop around before committing to a consolidation loan.

Instructions

1

Make a list that contains the total amounts due on all of your current debts and garnishments. Do not include a mortgage.

2

Total up the monthly payments of each account. Use a six-month average on any payments that vary from month to month. The total represents the monthly amount that you now pay on debts.

3

Shop for loans to pay off the balances and consolidate the debts into one payment. Review the annual percentage rates, interest fees and monthly payment amount of each loan. Your goal is for the new monthly payment to be less than the total you have been paying each month.

4

Choose a loan type and apply for the loan.

5

Pay each of the balances owed in full upon receiving the loan check.

6

Control monthly spending and monitor the budget closely. This is a vital step in a successful debt consolidation plan.