Paying Down Your Debt vs. Debt Consolidation


At some point in your debt relief journey, you may wonder whether you should work with a credit counselor to consolidate your debt, or whether you’re best off working to pay it down on your own. The choice is yours to make, but here are some of the pros and cons of each option to help you decide which route is better for you, given your financial situation, challenges, and goals.

Paying it Down: Pros

  • An obvious pro of paying down your debt is that you can do it on your own without support, extra fees involved in hiring a company to help, and without having to restructure or rearrange your debt. If you have sufficient income to make your monthly minimum payments on time and you’re comfortable working directly with your creditors, you may resolve to simply stay the course and work steadily toward a 0-balance.

Paying it Down: Cons

  • Choosing to manage your own debt means it may take you longer to pay it off. When you choose to engage a debt relief company to help you manage your payments, you can often shorten your payback timeline and get out of debt faster.  
  • If you owe money to multiple creditors, you run the risk of missing payments. It can be logistically stressful to juggle multiple deadlines, rates, and creditors, but entering a debt consolidation program eliminates this type of hassle by streamlining your repayment process.
  • Choosing to go it alone means you may pay more in interest over time. A credit counselor may be able to score you a lower rate through a consolidation loan, but simply making your minimum monthly payments means you’re beholden to the (often fluctuating!) rates your creditors set.
  • Bear in mind that you may also be so laser-focused on paying off your debt that you don’t stop to reflect on what got you into this position in the first place, how you can change your habits to avoid it happening again in the future, and how to structure your budget and financial plan to be more financially secure moving forward.

Debt Consolidation: Pros

  • Debt consolidation can simplify your debt relief process and substantially reduce the logistical stress involved in juggling multiple payments each month. Instead of keeping up with multiple creditors, interest rates, and deadlines, you can roll your debts into a single lump sum and engage your debt relief agency to make the payments to your creditors on your behalf.
  • If you hire a company to make your payments for you, you can take a breather from interfacing directly with your creditors and channel your energy into getting your finances in order.
  • You can lower your monthly payments and interest rates. This is an option available to you through debt consolidation that you could not score on your own if you’re simply making minimum payments and working to pay down your debt.
  • Debt consolidation gives you the gift of support: A key part of choosing debt consolidation is finding a partner like Countrywide to help you become debt-free. This can keep you encouraged through the stressful and often burdensome debt relief process.

Debt Consolidation: Cons

  • Although it can save you time and money, depending on the program and option you choose, entering a debt consolidation program may actually take you longer to pay off your debts – especially if you lower your payments and reduce your interest rates.
  • If your plan doesn’t work, you’ll end up right where you started, or even in a less favorable position. Once you’ve consolidated your debt, it’s absolutely vital that you stick with your payment plan. Otherwise, you risk damage to your credit score and may even face additional substantial penalties.
  • In some situations, if you use credit before you pay off your consolidated debt, you will dig yourself into a deeper financial pit. Taking on new debts before you resolve your existing ones is a dangerous move that can steep you even further in financial trouble.
  • You may end up indebted to yet another creditor – that is, if you opt to take on a debt consolidation loan to resolve your debts. Though these generally low-interest loans can help you resolve your high-interest credit card debts more quickly, you may find that it is best for you to avoid taking on yet another loan that you then have to pay back –  especially if you historically have trouble staying on top of loan payments.

No matter which option you choose, the first critical step in successfully conquering your debts is educating yourself about the various pros and cons of each of your options.