There are many companies out there offering "Debt Consolidation" which is also known as Bill Consolidation, Bill Management, Debt Consolidation Loan, Debt Management Plan, Credit Counseling, Credit management and Debt Elimination. Many make many claims that seem almost too good to be true. Claims like:

* Consolidate your debts into one low monthly payment.
* Reduce your debt by 40%-60%, in some cases even more.
* Eliminate interest and late fees.
* Stop harassing and threatening phone calls.
* Get out of debt in a fraction of the time.
* Rebuild poor credit

We've writing this section to clarify some of the claims these companies make and, hopefully, assist you in making a better decision in choosing help for your problem.

First of all, there are several separations in debt assistance. It basically breaks down into two major categories, Debt Consolidation and Debt Negotiation, which can be then broken down into several other sub-categories. This section talks about Debt Consolidation.

Simply put, a Debt Consolidation service, or sometimes referred to as a "Debt Management Plan", has preset arrangements with almost all of the major creditors (mostly credit card companies, and some medical & collection companies) where the interest rate is roughly predetermined. When you call a debt consolidation company they reference this creditor rate sheet and then give you a new payment based on the lower interest rates they have with that respective creditor. Typically this payment is lower than what the credit card companies offer the public and more often than not will save you money monthly and simplify your payments if you have multiple creditors.

One caveat of the Debt Consolidation plan is that you must cancel any and all cards you include in the program. You may wish to exclude a card for emergencies, depending upon the company's policies.

One benefit of the Debt Consolidation Program is if you are behind on payments and getting harassed by your creditors. If you can make the new monthly payment, this will stop the creditors from calling you and keep the satisfied for the interim.

The payments are usually setup to last 4-8 years and statistics have shown that there is a significant fallout on debt consolidation programs due to unrest, situations changing, and poor customer service.

Commissions to expect when shopping a debt consolidation company are roughly your first payment you'd make toward the program plus a monthly administration fee. For example: Say you owed $10,000 in credit card debt and your existing payment you were making was $350. With the lower interest payments, the debt consolidation company got you to $250 per month, a $100 "savings". You then would make a payment in the form of a monthly draft out of your checking account for the $250. Typically this doesn't cover a payment to your creditors so you'll need to cough up another $250 that month to pay your creditor bills.

Now onto the monthly admin fee. The monthly admin fee ranges all over the board, depending upon the company you are getting a quote from. Some charge a flat fee anywhere from $10-$40, others charge a per creditor fee of $5. Either way, you're paying about $30 per month that doesn't go toward your debt.

Who is this program good for you ask? A Debt Consolidation Program significantly benefits those who have very high interest rates (above 18%), have more credit card bills then they can keep up with, or would just like the simplicity of one payment to one company for all of their unsecured debt.

If you would like a free quote from a company similar to the ones mentioned above, click here