If you have done everything you can to get out of debt and still feel that you can’t do it alone, consider debt consolidation. Because we have so much outstanding consumer debt in the United States right now, debt consolidation has become a big business.

The main objective of a debt consolidation service is to keep you out of bankruptcy by helping you to design a plan for paying off your debts. This will include consolidating your debt and renegotiating with creditors for a better interest rate. If you wish, these organizations will contact the creditors on your behalf, set up a payment plan, and you pay a monthly amount for them to distribute to the creditors. They help to lower existing monthly debt payments, combine (consolidate) all debt payments into one monthly bank deposit amount, reduce or eliminate the interest creditors charge, and bring delinquent accounts current. This helps to eliminate late fees and over-the-limit fees, stop harassing phone calls, and improve personal credit rating. There is a fee for this depending on the amount of debt involved. You will most likely have to agree not to apply for any new credit cards while you are in the process of eliminating your debt. Debt consolidation can only be done with unsecured debt such as credit card payments, not with secured loans or mortgages.

You will want to inquire about the charge for debt consolidation services. Charges for these services vary from agency to agency and, if you are not careful, can be just another debt to add on top of your already overwhelming mountain. Although these are nonprofit organizations, they do have to make enough money to stay in business. At least 30 percent or more of their financing comes from credit card companies that would rather get their money back (even if only some of it) than have it go into a bankruptcy. The rest comes from the debtors who pay on a sliding scale for the service.

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