How to Consolidate Collection Agency Debts to One Monthly Payment

Making multiple monthly payments on debts held by collection agencies can be stressful. The collection agencies may harass you by telephone if you are late by even a day. Or you may find that you have over-committed on your promises to pay and that your budget won't allow you to pay what you have promised. Consolidating all the debts into one affordable monthly payment could help you better manage your budget and relieve some of the stress.

Instructions

1

Get a debt consolidation loan or home equity loan. Granted, credit approval may not be possible because of the collection accounts. However, the collection accounts could be very old and may no longer be affecting your credit score as they once did. If your credit score has recovered, a bank or other lending institution might approve a debt consolidation loan or home equity loan specifically for paying off the collection accounts.

2

See a nonprofit credit counselor such as those affiliated with Consumer Credit Counseling Services (see Resource). Get a referral from your bank or credit union. Ask the counselor about debt management plans, which allows the counseling agency to contact unsecured lenders and debt collectors on your behalf.

3

Agree to a debt management plan. The counselor will contact the debt collectors to negotiate monthly payments. You must send the counseling agency a lump sum each month to cover the payments. This will allow you to pay all the collection accounts with one monthly payment. You will also be charged a management fee, however.