INDIANAPOLIS (WISH) — If mounting credit card bills have you feeling overwhelmed, you’re not alone. Many families are stuck in the cycle of rising balances and minimum payments, but there is a way out. It’s called debt consolidation, and when done with the right help, it could save you thousands.

Ian Morris knows the feeling all too well. After losing his job in academic publishing, his family leaned heavily on credit cards just to make ends meet, covering car repairs, groceries, and everyday costs.

“So basically, what was happening, there was a sense of frustration,” Morris said.

His credit card debt ballooned to nearly $100,000. That’s when he reached out to the nonprofit Money Management International. With their help, Morris enrolled in a debt management plan. After five years of steady payments, he paid it all off.

“As we came closer and closer to the end of paying it off, we just felt better and better,” he said.
“Very excited that we were able to do this.”

Debt management plans combine your payments into one monthly bill, often at a significantly lower interest rate, and typically lay out a clear timeline to pay off your debt, usually within three to five years.

“The program combines your payments into one monthly bill, often at a significantly lower interest rate, and gives you a clear timeline, usually three to five years, to pay it off,” said Lisa Gill, an expert with Consumer Reports.

But there’s one thing to consider: Starting a debt management plan could cause your credit score to drop at first, because you may be required to close some or all of your credit cards. The good news? If you stay consistent, that score should recover, and improve, over time.

“Be careful with companies that communicate to you out of the blue, or who pressure you into making a quick decision, or even ask for money upfront. Legitimate debt relief agencies don’t do that,” Gill explained.

By law, companies selling debt services by phone can’t charge you anything until they’ve actually settled or reduced your debt. Reputable services will explain their fees clearly and won’t try to rush your decision.

Consumer Reports recommends checking out the National Foundation for Credit Counseling for a list of accredited nonprofit agencies.

According to Money Management International, someone with $23,000 in credit card debt could save more than $48,000 in interest using a debt management plan.

For Morris, having a roadmap and seeing his progress each month helped him stay focused and committed.

Debt consolidation might not be right for everyone, but for many, it’s the turning point that finally brings peace of mind.

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