How to handle $50,000 in debt—and whether a loan makes sense

Lots of people have found themselves $50,000 in debt or more and have made their way out. They did it, and so can you. 

Researching different tools and resources is a smart way to get on a turbo-charged path to clearing your debt. For instance, many people find that a $50,000 debt consolidation loan is tremendously helpful in getting rid of debt. A debt consolidation loan allows you to move multiple debts to a single loan, with an easier-to-manage payment. In order for a debt consolidation loan to work well, you need to first know how to use this tool. 

What does $50,000 in debt really mean?

Carrying $50,000 in debt can impact you in a few ways. Emotionally, debt can be a daily burden that never lets up. It’s also a constant financial drain. If you’re stuck carrying that debt for a long time, it can be a real drag on your personal finances. 

Let’s compare how much $50,000 in debt might cost you, depending on the type of debt you have: 

Credit card debt can be particularly draining. Paying off credit cards can take decades and tens of thousands of extra dollars, especially if you’re paying the minimum. 

Those payments are money that could be going toward your emergency fund, retirement account, family vacation, or even the down payment on a house. 

A typical personal loan could take a few years to pay off and come with some fees, but it’s far cheaper than paying off credit cards. 

In fact, personal loans are a common option for people looking to take out a debt consolidation loan to pay off higher-interest credit card debt. The right personal loan can help you get rid of debt years sooner—while saving you thousands of dollars. 

Do any lenders offer $50,000 consolidation loans?

Yes. People often use a personal loan to consolidate debt. Many lenders offer $50,000 personal loans specifically for debt consolidation purposes. 

You may need to spend some time searching around for lenders who offer a $50,000 debt consolidation loan, depending on where you live and whether you’re willing to apply with online lenders. Often, you can get pre-qualified with a lender. That means you provide basic information and the lender gives you your approval odds and what rate you could get before you submit a formal application and they do a hard credit check. Hard credit checks can affect your credit score, so it’s best to save them for when you feel confident about your chances of approval.

Each lender sets different loan requirements. Sometimes they’re more stringent if you’re borrowing a larger amount, such as a $50,000 debt consolidation loan:

• Credit score. Lenders typically require fair to good credit. 

• Debt-to-income ratio. Most lenders will let you apply for a debt consolidation loan if your monthly debt and housing payments don’t take up more than 43% of your monthly pre-tax income. Some lenders allow a higher DTI.

• Collateral. Some lenders may require collateral. That’s something of value that you own that serves as a guarantee that you’ll repay the loan. 

Should you consider a home equity loan or HELOC?

If you’re a homeowner, one potential option might be a home equity loan or HELOC. This is a popular way for homeowners to consolidate debt. Home equity loans often come with lower interest rates than personal loans. That could mean a lower total loan cost. 

You might also be able to borrow a larger amount of money, since home equity loan limits are partially determined by the value of your home. A $50,000 personal loan might be out of reach for some people, but a $50,000 home equity loan could be easier to qualify for. 

The tradeoff? Home equity loans are secured loans guaranteed by your home. If you default on the loan, you could lose your home. A $50,000 home equity loan could offer the best support in getting rid of debt, but be realistic when looking at your long-term payment ability. It’s not ideal to default on any debt, but defaulting on a home equity loan carries a special risk. 

What are your other options?

Not everyone is eligible for a $50,000 debt consolidation loan or is interested in using one, and that’s okay. You still have plenty of other ways to handle your debt:

• Work with your creditors. If you’re struggling with your debt but you expect the difficulties to be temporary, your creditors might be willing to help. They may offer specific programs and options, such as lowering your interest rate or letting you skip a few payments. A private agreement with your creditor may be the cheapest and easiest thing to try and is often helpful. 

• Credit counseling. Nonprofit credit counseling agencies can enroll you in a debt management plan. That’s a structured repayment plan to fully pay off your debts in three to five years. You get money management guidance while you’re in the plan, but you have to close your credit accounts. This could be a good solution if you can afford the payments.

• Debt relief. If you have a financial hardship and genuinely can’t afford to repay your debts, and you don’t want to go through bankruptcy, debt relief could be a good option. That’s when your creditor agrees to accept less than you owe but consider it payment in full. You can negotiate with creditors yourself or work with a professional debt relief company.

• Bankruptcy. This legal process can help you shed your unsecured debt quickly if you qualify for Chapter 7 bankruptcy. If you can afford a monthly payment, you'll be directed to Chapter 13 instead, which is a three to five year repayment plan.

What’s your best next step?

A $50,000 debt can absolutely be solved. The first step is choosing a direction and taking action. Don’t forget to pat yourself on the back for reading up on your options. Here are some moves you can make next:

• Gather your debt details: every balance level, interest rate, and payment amount.

• Talk to a debt expert about your options.

• If a debt consolidation loan looks like a good fit, get prequalified.