• Debt consolidation involves combining all of your debts into one lower, more affordable monthly payment. Debt consolidation allows you to get back on track quickly, and helps preserve a decent credit rating, compared with the effects of debt settlement or bankruptcy.
  
  If you are considering debt consolidation through a debt management program or loan as one of your financial options, you will need to make some decisions and gather together some important paperwork.
  
  

Proof of Income

• You must provide proof of income for yourself, and your spouse or partner if you are not single. They will usually ask for pay stubs from the last three months, as well as a calculation of any other income you might have coming in; for example, alimony or child support.
  
  Be sure to provide up to three years of tax returns for you and your spouse. This will help them determine income and your pattern of spending. Has your debt issue been the result of sudden hardship, or a pattern of spend versus save?
  
  

Records of Debts You Want to Consolidate

• Most consolidation firms require customers to have an unsecured debt of at least $4000. Some companies will have a threshold of $10,000, or a specific ratio of debt to income.
  
  You will also need your mortgage payment record for the past three months. If you are in arrears, you should show them any copies of letters from the bank.
  
  Provide copies of any outstanding medical bills, copies of any letters from collection agencies for any outstanding debts and past copies of your student loan repayment statements. Student loans are not usually part of any consolidation, but are evidence of your key expenses and demonstrate reliability in keeping to a payment plan.
  
  You'll need to provide include credit card statements for the past three months on all the card balances you want to include in the consolidation agreement. You can include all of your cards, or you can put in only the ones you are sure you will not be able to pay off within a reasonable amount of time. Make sure you do not run up the bills with a lot of purchases prior to applying for the debt consolidation loan.
  
  Other necessary records to provide include the account number, mailing address and phone number for each of the credit cards you plan to include in the debt consolidation, as well as evidence of any other unsecured debt you would like to include as part of the debt consolidation program or loan.
  
  

Other Useful Paperwork

• While not necessarily required, you should also provide an accurate budget with a realistic spending plan. Be honest about what you have been spending money on, then cut that amount in half.
  
  Bring a recent copy of your credit report. You may not have to show it to the debt management group you are working with, but you will want to be proactive about taking charge of your finances. Learn as much as you can about your credit score and how to improve it.
  
  Create a daily log of everything you spend in a week to help demonstrate you have the discipline to pay off the debt in a responsible manner. Also, create a chart on debt consolidation loan terms, so you can compare offers from different companies. They will all determine the interest rate on your consolidation loan based on your credit score, as well as the other information you are presenting. If you don't like the terms or are not sure they will fulfill their promises, move on to another service or lender.