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How to Consolidate Your Debts in Michigan

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In a Nutshell

You can get started on consolidating your debt today. Using the following information, you can gather necessary documents, determine which approach to debt consolidation may be best for you, and choose a debt consolidation lender or credit counseling agency to manage your DMP with ease.

Written by Upsolve Team.  
Updated February 17, 2020


If you are either becoming concerned about your mounting personal debt load and/or you’re having trouble making ends meet, know that Michigan debt consolidation may be a debt management strategy worthy of your consideration. .

Michigan debt consolidation works by combining your high-interest unsecured debts into one account. You then make a single payment each month to pay off this consolidated debt over time. This one payment makes it easier to pay your bills when they become due and makes over-the-limit and late fees less likely. There are two ways to pursue debt consolidation in Michigan. The first involves securing a new line of credit and using it to pay off your existing debts. When debt consolidation is done this way, it can be accomplished through using an unsecured personal loan, a home equity loan, credit card balance transfer, or mortgage refinance as a balance transfer. When debt consolidation in Michigan is completed without taking out a new loan, it is done via a debt management plan. You will need to work with a non-profit credit counseling agency to set up your debt management plan. The credit counseling agency you choose will take care of getting your creditors to agree to the plan, setting up an account for you to make your payments, distributing your payments, and usually negotiating a lower interest rate and waived over-the-limit and late fees. This is a great alternative for individuals with poor credit, as it is an option available to everyone, regardless of their credit score. 

Learn More Through Free Nonprofit Credit Counseling

You can learn more about Michigan debt consolidation during a free non-profit credit counseling session. Debt and budget counseling is a no-cost, no-obligation service offered by accredited, non-profit credit counseling agencies. This session is intended to help you understand your current financial situation and to become empowered to take active steps to improve your relationship with your money and your debt. When you take part in free, non-profit credit counseling you will work one-on-one with a trained credit counselor to identify financial challenges, set financial goals, and create an action plan to achieve those goals. Depending on the outcome of the counseling session, additional debt relief services may be offered.

Most non-profit credit counseling agencies can also help you construct a Michigan debt management plan. A debt management plan is a form of debt consolidation that allows you to consolidate your debts irrespective of your credit score, usually with better loan terms and lower monthly payments than you are currently paying. You can get more information on credit counseling through a number of services including Money Management International,CESI, orGreen Path. For help finding an accredited non-profit credit counseling agency in your area, feel free to contact Upsolve.

How to Consolidate Your Debts in Michigan

You can get started on consolidating your debt today. Using the following information, you can gather necessary documents, determine which approach to debt consolidation may be best for you, and choose a debt consolidation lender or credit counseling agency to manage your DMP with ease.


Collect the Details About Your Debts 

Begin your Michigan debt consolidation process by collecting information about the debts you would like to consolidate. This will usually consist of your most recent credit card statements and the monthly bills for your other debts such as medical bills and other unsecured debt. Pay particular attention to the total amount owed, the due date, current balance, minimum payment, and interest rate. Also, consider obtaining a copy of your free annual credit report to make sure you do not miss any outstanding accounts during your information-gathering process. Once you know “what” you owe, you can determine which accounts you’d like to consolidate. 

Determine Your Monthly Income

For the purposes of determining whether debt consolidation is a sustainable option for you, you should avoid including overtime pay and “special pay” when calculating your monthly income. Successful debt consolidation is dependent upon a debtor’s ability to make monthly debt consolidation payments every month reliably over an extended period of time. Including overtime and irregular income in your monthly income calculations may artificially inflate how much money you have available every month to pay your bills. When calculating your income, you should ideally reference your two most recent pay stubs, provided they are representative of a typical work week. 

Put Together Your Budget

You can now use your monthly income to put together a budget. An accurate budget is a mainstay of good money management. A budget serves as a screenshot of the income you have coming in every month and the expenses you have going out. A budget typically categorizes expenses as “fixed costs” or “variable costs.” Fixed costs are expenses that largely remain the same such as rent, mortgage, car loans, student loans, and insurance. Variable costs are expenses that fluctuate from month to month and can include groceries, gas, utilities, recreation, entertainment, and charitable donations. To create your budget, you should list all of your regular income and all your expenses and subtract your total expenses from your total income. (At this point, DON’T include monthly payments on any accounts you hope to consolidate.) The resulting calculation is your disposable income. If you have trouble putting together your budget on your own, there are several online apps that will help you set one up like Mint and Albert. Your bank or credit union may also offer online tools to help you with budgeting.

Do the Math

After doing a little math, you’ll be able to approach lenders about funding your Michigan debt consolidation loan with the confidence that you are a good candidate for the loan you are seeking. Alternatively, you’ll be able to work with a credit counseling agency to set up a debt management plan for success once you better understand how much money you have available for your monthly payments. You’ll want to calculate your approximate monthly Michigan debt consolidation loan payment to get a better sense of whether you can make your payments regularly and without hardship. To do this, take your total debt (of the accounts you hope to consolidate) and divide it by 60. The result is how much the monthly payment would be if you were to pay off the total balance (without interest) over five years. 

Review Your Michigan Debt Consolidation Options

Now is a good time to review the pros and cons of each type of debt consolidation loan that may be available to you and how they compare to a customized debt management plan:

  • A good option to start with, if it is available to you, is an unsecured personal loan. A personal loan allows you to consolidate any debts you have. The disadvantage is that it may be difficult to obtain with poor credit or it may come with a high-interest rate.

  • Another good option is a credit card balance transfer. A credit card balance transfer allows you to consolidate other credit cards without having to close any of them. The disadvantage is that it can only consolidate credit card debt and the interest rate can rise significantly if you are unable to pay the balance off prior to the promotional period expiring.

  • Refinancing your home mortgage or securing a home equity loan are also good options. Both have historically low-interest rates and allow you to pay off whatever debts you want. But both usually require good credit, can take a long time to complete and may jeopardize your home in the event of default.

  • A Michigan debt management plan is a good option if you have poor credit, need debt relief relatively quickly and have reliable, regular monthly income. A debt management plan gives you the convenience of one single monthly payment. This payment is paid to a non-profit agency that distributes it to your creditors and negotiates with them to (ideally) lower your interest rate and waiver over-the-limit and late fees.

Apply for a Michigan Debt Consolidation Loan

Obviously, choosing a lender to fund your Michigan debt consolidation loan is an important step in consolidating your debts. The best lender for your Michigan debt consolidation loan will depend largely on the type of debt consolidation you choose to pursue. There are some common-sense precautions you can take, when selecting a lender, to make sure you are not taken advantage of by scammers and unscrupulous enterprises:

  • Avoiding or carefully screening direct mail and online offers is a sensible precaution you can take to reduce your chances of being ripped off or taken advantage of.

  • Another reasonable precaution you can take is to never cash or deposit unsolicited checks you receive in the mail. Doing so could disclose your personal banking information to fraudsters.

  • Another good rule of thumb when dealing with unknown lenders is to never pay money upfront. Your lender should not demand money from you before they have provided any service.

  • A final precaution you take to not only avoid being ripped off or taken advantage of but to make sure you have exhausted all your options is to compare whatever offers you receive to similar results you might be able to achieve through a debt management plan. You should never settle for a loan you are not happy with because you have bad credit or do not earn enough to qualify for better terms. A debt management plan is tailored to your specific financial situation and is available regardless of your credit score.

Finally, if you feel you are being taken advantage of or have been pressured into an arrangement against your will, report your dealings with that lender to the Michigan Attorney General.

How to Stay Current with Payments After Consolidating Your Debts in Michigan 

Once you have been approved for the Michigan debt consolidation loan of your choice, it is imperative that you stay current with your Michigan debt consolidation loan payments. Here are some things you can do at the start of your Michigan debt consolidation process to make it more likely you will stay current with your payments:

  • Ask your lender to fund your debt consolidation loan so that your due date does not fall on the same date as other large monthly expenses.

  • Ask your bank or credit union to set up your debt consolidation loan as an automatic monthly bill payment.

  • Set up an emergency fund to cover unexpected large one-times expenses (taxes, tuition, repairs).

  • Pay extra when you can and pay early if possible.

  • Review your monthly statements and keep track of the payments you have made, the payments you have remaining and the interest, fees, and costs you have been charged. If anything looks out of place, talk to your lender or credit counselor.

Michigan Debt Management Plan

If your credit will not allow you to take advantage of a Michigan debt consolidation loan, then a Michigan debt management plan may serve as a great debt consolidation alternative for you. A Michigan debt management plan allows you to combine all of your unsecured debt into one single payment just like a debt consolidation loan does. However, entering into a debt management plan is possible even if you have bad credit. A non-profit credit counseling agency can help you with your Michigan debt management plan from start to finish.

Michigan Debt Settlement

If you have access to a large lump of money to pay to creditors, you may want to consider the debt consolidation alternative known as Michigan debt settlement. Debt settlement works by allowing you or a third-party company to negotiate with your creditors to accept substantially less than what they are owed to settle your accounts. To accomplish debt settlement, you’ll need to provide your creditors a lump-sum payment in exchange for partial debt forgiveness. Debt settlement typically relies on for-profit debt settlement companies to negotiate on your behalf. But in return for them doing so, you may be required to deposit your funds with the debt settlement company in advance and agree to pay substantial fees and commissions for each debt they settle. 

Michigan Bankruptcy

When you have done the math to determine whether debt consolidation is a good option for you, the number may have pointed you in a different direction. One alternative to debt consolidation is filing for Michigan bankruptcy. If you do not have the income to make a regular debt consolidation payment or you have too much debt to consolidate affordably, then bankruptcy can help. Bankruptcy legally eliminates your eligible debts and grants you a fresh start financially. You can file for bankruptcy on your own, or with the help of a competent bankruptcy attorney. If bankruptcy is your best option at this point, Upsolve is here to help.



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