Do unsecured personal loans count toward a $20,000 debt-relief review?
Potentially, yes. The key word is unsecured: the loan is not backed by a house, car, savings account, or other collateral. Verify the current balance and count the obligation once.
The short answer: Debt20KPlus includes potentially qualifying unsecured personal-loan balances in its initial $20,000 calculation. They may be combined with distinct credit-card balances, medical bills, and collection accounts. A personal loan secured by collateral does not count in this site’s screen. Passing the arithmetic screen is not enrollment, approval, or a promise that a creditor will participate.
Personal loan does not always mean unsecured
The CFPB describes a personal installment loan as money borrowed in a lump sum and generally repaid in fixed installments over a set period. That describes the payment structure, not necessarily the collateral. Some personal loans are unsecured; others may be backed by a vehicle, savings account, certificate of deposit, or another asset.
Potentially include
An installment loan for personal expenses when the agreement gives the lender no security interest in property.
Do not include here
A loan tied to a car, home, deposit account, or other pledged collateral—even if the borrower used the money for personal expenses.
Look for terms such as security interest, collateral, lien, or a description of pledged property in the agreement and disclosure. Do not decide from the product name alone. If the paperwork is unclear, ask the lender to explain the classification in writing.
Three numbers to verify
For an initial debt total, use the lender’s current balance—not the original amount borrowed and not the sum of all future scheduled payments. Interest, fees, credits, and recent payments can make several figures appear on the same statement.
A payoff quote may differ from a statement balance because interest can accrue through a particular date. For this site’s preliminary screen, use a current, documented balance consistently. The provider must still review the account and decide whether it is eligible.
How an unsecured personal loan can help reach $20,000
This passes Debt20KPlus’s amount screen. A $24,000 auto loan would not count because it is secured by the vehicle. Final eligibility still varies by account, creditor, provider, and state.
You do not need one $20,000 account. You can combine separate potentially qualifying unsecured balances. Use the complete qualifying-debt worksheet to keep credit cards, personal loans, medical bills, and collections organized.
Avoid double-counting a consolidation loan
A personal loan is sometimes used to pay off credit cards. Once the loan proceeds have paid those cards, count the remaining personal-loan balance—not both the loan and the former card balances. Cards with a true remaining balance can still be listed separately.
If you only applied for a consolidation loan, an approval or offer is not yet a debt. If funds were disbursed but card payments have not posted, record the timing and verify every balance before calculating. Our debt-consolidation comparison explains why one payment is not automatically a lower total cost.
Before considering settlement, contact the lender
If a payment is becoming unaffordable, the CFPB recommends contacting the lender as soon as possible. Depending on the lender and circumstances, options may include a deferment, forbearance, partial-payment arrangement, or payment plan. None is guaranteed, and a lower monthly payment can extend repayment or increase total interest.
- Explain the reason for the hardship and the payment you can realistically sustain.
- Ask how interest, fees, maturity date, automatic payments, and credit reporting would change.
- Request the complete terms in writing before agreeing or sending money.
- Keep statements, correspondence, and confirmation numbers together.
Compare any lender proposal with a household budget, nonprofit credit counseling, and other options. A new loan can create origination costs and may not solve a spending or income gap. Do not pledge a home or vehicle merely to make unsecured debt appear cheaper without understanding the risk to that asset.
Risks if payments stop
Missing personal-loan payments can lead to late charges, negative credit reporting, collection activity, and possibly a lawsuit. If the account goes to collections, do not count the lender’s old statement and the collector’s notice as two separate debts. Follow the verification steps in our collection-account guide.
Debt-settlement programs carry additional risks. Fees and interest may grow, creditors can refuse to negotiate, collection efforts or lawsuits may continue, and credit scores may be harmed. A forgiven amount may have tax consequences. Review the tradeoffs in our debt-settlement guide before treating settlement as the default answer.
Frequently asked questions
Does a loan used to buy a car count if it is called a personal loan?
The use of the money is not decisive. If the agreement grants a lien or security interest in the car, it is secured and does not count in this site’s unsecured-debt screen.
Should I use the original loan amount?
No. Use a current documented balance. The original amount ignores payments already made and later interest or fees.
Can several unsecured personal loans count?
Potentially, if each is a separate valid unsecured obligation. List each once and confirm current balances. Provider policies and state availability still apply.
Do student loans count as personal loans here?
No. Federal and private student loans are excluded from this site’s $20,000 qualification calculation and follow separate rules and programs.