Five ways to streamline your debt without a consolidation loan

By Jackie Lam

Reviewed by Keith Osmun

Aug 07, 2023

Read time: 6 min

Mother with her baby boy and cute girl working from home

Key takeaways:

  • There are ways to pay off your debt even if a consolidation loan isn't the right solution.

  • Options include a home equity loan, debt resolution, or a debt management plan.

  • There's always a way to simplify your finances

Debt consolidation can be a relief for those with multiple debts, but it’s not an option for everyone. If you want to ease your financial stress but can’t get a consolidation loan, here are five alternatives to deal with your debt. 

Can you do debt consolidation without a loan? 

Debt consolidation is when you lump together multiple debts—like credit cards and personal loans—so you can make a single monthly payment. People often do this by taking on a new, larger loan and using it to pay off multiple smaller ones. 

What if you can’t get a new loan or you don’t want to? There are other options.

  • Debt resolution program

  • Debt management plan

  • Debt snowball

  • Debt avalanche

  • Debt blizzard 

We’ll break down each of these options in detail.

Ways to consolidate debt without a loan 

Let's take a closer look at what each of these options involves. 

Debt resolution 

Resolving debts means negotiating with creditors to pay less than you owe. The idea is to negotiate with your creditors to let you pay off your debt for less than the full amount you owe and forgive the rest. This is a possible strategy for someone who genuinely can’t afford to repay their debts without some amount of debt forgiveness.

You can resolve debts yourself or hire a professional debt resolution company to do it for you. 

Who it’s for:

Debt resolution is for serious debt problems. Most creditors won’t consider lowering your debt unless you're experiencing a financial hardship that makes it unlikely that you’ll be able to repay your debts without some degree of forgiveness—and you're already behind on payments. 

How it works:

It’s common to offer a one-time lump sum that’s lower than the total amount you owe. If the creditor accepts the offer, the debt is considered paid in full. If you don’t have a lump sum to offer, you would need to save that up first. If you work with a legitimate debt resolution company, they will help you set up a dedicated account for this purpose. Also, some creditors will agree to a payment plan. 

What to expect:

Debt resolution can reduce the amount you owe, which can help you get rid of your debt faster than if you just made minimum payments. Plus, the monthly payment into your dedicated account may be lower than the total of all the monthly payments you currently pay. That can improve your cash flow. There is no minimum credit score required for debt resolution.

Missing payments can negatively affect your credit, and resolved debts are not as favorable on your credit reports as accounts that are paid as agreed. A debt resolution program can’t stop collections, and creditors might sue you. Reputable debt resolution providers can provide or refer you to legal support. 

Most people can complete a debt resolution program in two to four years.

Leave debt behind, so you can move forward

Get rid of your debt and free up your cash flow without a loan or great credit.

Debt management plan (DMP)

A debt management plan, or DMP, is a payoff plan. Like a debt consolidation loan, a DMP can help you get rid of your debt while you make one monthly payment. But DMPs aren't loans. Nonprofit credit counseling agencies run them, and creditors fund the agencies. Creditors want to be paid back in full, but if you enter a DMP, they might be willing to lower your interest rate or waive some fees. 

Who it’s for:

DMPs are for someone who wants to pay off their debts in full and can afford to do so in three to five years but needs help organizing their finances and learning how to manage their credit.

How it works:

You make a single monthly payment to the agency, and the agency distributes the money to your creditors. DMPs typically require that you close all your credit card accounts. If you miss a payment, your creditors may stop participating in your plan.

What to expect:

DMPs also might include budgeting advice. You might be able to get past-due accounts re-aged (brought current). There is no minimum credit score for a DMP.

A DMP doesn't reduce what you owe, and you will have less access to credit while you’re in the plan. Closing your credit accounts could have a negative effect on your credit profile. 

Paying off your debts in full over three to five years can mean a high monthly payment. Make sure you can fit it into your budget.

DIY methods 

These are do-it-yourself tactics that take different approaches to paying down debt. All of these ways to pay off debts start with listing your debts along with the interest rates and the current outstanding balances. 

Debt snowball method 

With the debt snowball method, you pay as much as you can toward the debt with the smallest amount owed (regardless of the interest rate). You continue making minimum payments on the others. 

Once you pay off the first debt, you add its payment to the minimum payment you were making on the second debt. That should make the monthly payment on this debt even bigger than the payment you made on the first debt. This is how your debt payoff plan “snowballs.” The payments should get bigger every time you knock down a debt. You continue to work your way down the list of debts until all your debt reaches zero. 

The main draw of the debt snowball method is that you get the quickest win by focusing on the smallest debt. That can help you stay motivated to pay off your debt. Hitting milestones can counter debt fatigue and give you the momentum you need to keep going.  

Debt avalanche method 

With the debt avalanche method, you do the same thing, but you start with the debt that has the highest interest rate (regardless of the amount you owe). Once that’s paid off, focus on the debt with the second-highest interest rate. You keep going until ‌you’ve paid all your debts. 

The main benefit of the avalanche method is that you can save money. On average, people get rid of debt one to two months faster using this method. But it can take longer before you pay off your first debt.  

Debt blizzard method

The debt blizzard is a lesser-known approach. It's a mix of ‌snowball and avalanche debt payoff methods. You pay off the smallest debt first, which gives you a psychological boost. Then you pay off the debt at the highest interest rate. From there, you stay with the avalanche method until you’re done.

All the DIY routes use your money, not loans. You’ll reach your goal faster if you reduce your spending to free up cash and focus on your debt.

Tips for debt consolidation

Here are some helpful pointers for getting rid of debt: 

Build an emergency fund. Even if you’re paying down debt, develop the habit of putting some money aside. Stashing cash will help you avoid adding new debt. The Achieve MoLO app connects your accounts and tracks your income and expenses so that you can have more Money Left Over (MoLO). After you set aside one month’s expenses, you could use that money toward paying off your debt. Then keep building your emergency fund.

Make consistent payments. No matter what debt strategy you choose, always pay on time. On-time payments let you make steady headway against your debt. 

Look for ways to increase income. If you can, find ways to earn more money. If time permits, consider picking up a short-term seasonal job like delivering groceries a few evenings a week, or selling unwanted items online. 

Set financial goals. Create a plan and be intentional about your spending. The Achieve GOOD app can help you discover where your money is going, drum up a smart debt payoff plan, and get debt-free on your own.

Find an accountability partner. This could be a coach, friend, or family member you can check in with regularly to help you stay on track. 

An Achieve debt consultant can help you stay accountable and on top of your debt payments. Get started here. We're here to help.

Jackie Lam - Author

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

Keith Osmun

Keith is an editor and fact-checker for Achieve. He makes sure the content is accessible by ensuring that each piece has impeccable grammar, an approachable tone, and accurate details.

Frequently asked questions

You can pay off your debt without already having money with debt resolution or a debt management plan. If your situation is severe, you may need to consider bankruptcy. If you are a homeowner with some equity in your home, a home equity loan may be an option to consider.

You can take out a debt consolidation loan to pay off multiple debts so that you only need to make one monthly payment. If you want to do debt consolidation without a loan, you can use the snowball, avalanche, or blizzard methods to pay off your debts. 

Consolidating debts and settling or resolving debts both have pros and cons. Both can help you simplify your finances, possibly lower the overall cost of the debt, and free up cash in your budget. Consolidation loans are for someone who qualifies for a loan and can afford to repay their debts in full. You would need to meet the lender’s credit and income requirements to get a consolidation loan. Debt resolution is for someone who can’t afford to repay their debts in full. There is no minimum credit score for debt resolution.

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