Core Insights - The article discusses various methods for debt consolidation, emphasizing the importance of choosing the right approach based on individual circumstances [1][2]. Group 1: Consolidation Loans - A consolidation loan is a single loan used to pay off multiple debts, requiring good credit standing to secure a favorable interest rate [3]. - The primary benefit of a consolidation loan is the potential to save money while reducing debt balances [3]. - A significant drawback is that it may not address underlying spending habits, leading to further debt accumulation [4]. Group 2: Debt Management Plans - Working with a nonprofit consumer credit counseling agency can lead to a structured debt management plan (DMP) that simplifies and accelerates debt repayment [5]. - Credit counselors negotiate with creditors to combine debts into one manageable monthly payment, often reducing interest rates even for those with poor credit [6].