A debt consolidation plan involves taking all your unsecured debts (debt not secured by collateral, such as credit cards and personal loans) and rolling them into one lump sum with a single monthly payment and possibly a lower interest rate. This can reduce your total monthly payments and help you pay off your debt faster.

You can consolidate your debts through a number of options, including a debt management program, loan, balance transfer card or even bankruptcy. Each has its pros and cons, so determine which will best suit your needs and circumstances. Consider how much you owe and whether the debt is due to one-time events or chronic spending habits. You’ll also want to consider your credit score, debt-to-income ratio and budget.

To choose the right option for you, start by gathering all your debt information and your budget. This includes your credit card balances, as well as all your other recurring expenses like mortgage or rent, utilities, car payments and groceries. It’s important to understand your total monthly expenditures, as this will help you decide how much to dedicate each month toward debt repayment.

If you’re considering a loan to consolidate your debt, research the lender and interest rates. Make sure you understand all fees involved, such as loan origination and transfer fees, prepayment penalties, annual fees and more. These can add up quickly.

Another common option is a home equity loan or line of credit. However, borrowing against your home can put your property at risk if you fail to pay. Also, tapping into your retirement savings is a bad idea, as it can significantly impact your future financial security.

Credit unions and banks offer unsecured debt consolidation loans with competitive interest rates. But it’s crucial to understand that these are short-term loans, which will likely be reported as a new account on your credit report and may cause a temporary dip in your credit score.

A debt settlement company can negotiate on your behalf with creditors to settle or change the terms of your existing debt. These companies can be expensive, but they can save you money in the long run by reducing or eliminating your debt.

Bankruptcy is another way to eliminate your debt, but it will remain on your credit report for 7-10 years and could make it difficult to qualify for credit in the future. It’s generally only a good option for people who can afford to repay their debts within that time frame and have no other alternatives.

A debt consolidation plan can reduce the amount you pay each month and help you become debt-free more quickly, but it doesn’t address the underlying causes of your debt. Unless you change your spending habits, it’s unlikely that you’ll ever be able to stay debt-free with a consolidation loan alone.