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Some people prefer a DIY debt management plan, while others benefit from simplified singular payment of a debt consolidation loan.

“Debt consolidation really depends on the person and the type of debt,” Germano said.

This makes the most sense when the personal loan has a lower interest rate than you’ve got across your existing debts.

You can consolidate a variety of debts, including credit cards, payday and personal loans, utility bills and medical expenses, so instead of having to send a separate payment to each creditor or collector every month, you’d make just one.

Determining which method will benefit you the most will involve some homework and some calculations … can take many forms, including a personal loan, a balance-transfer credit card, a home equity line of credit (HELOC) and a debt management plan, among others.

(We’ll get into the details of those options later on.) No matter what strategy suits you best, the idea is the same: Lump together all or most of your debts into a single payment as a way to save money, simplify your finances … For example, if you have multiple high-interest credit card debts and outstanding medical bills, you may want to take out a personal loan to repay those debts.

Then you can focus on repaying that personal loan, which requires just one monthly payment and, ideally, has a lower interest rate than what you were paying across multiple debts (it may not have a lower rate, but it’s in your best interest to find the lowest one you can).

The specifics of how debt consolidation works will vary by the type of debt you have and the method you choose.

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