The debt consolidation company will do all the contacting of your lenders and credit card companies to get all your debts piled into one debt.

Natalia Osorio Editor of the “Best Debt Consolidation Services” website – http://www.ReputableDebtConsolidationCompanies.com – pointed out;

“…The debt consolidation company will charge you a fee for this service but in the long run you may better off to deal with your debt this way since they will usually be able to negotiate a better deal for you causing you to pay less on your overall debt. The company will usually be able to work with your creditors to lower your overall payout therefore saving you money…”

On the other hand, credit counseling is something a company that specializes in that field can help you with but all they are doing is counseling you on the situation.

The credit counseling is not part of making telephone calls to your creditors and lenders and bargaining with them for a lower payout amount like the debt consolidation is. Credit counseling is a good idea if you need some help with getting a plan together for yourself or your family. When you visit them you will need to take all your bills so they are able to analyze everything and give you some advise on what you should be doing in the future with you credit situation.

“…The best thing to do before you decide, is to sit down with all of your bills and see where you stand with them with their monthly payouts and payoff amounts and then decide which is the best option for you to choose…” N.

Osorio added.

Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com

But there are so many programs and so many offers! The number of scam artists is growing, and consumers need to know which program is right for them and how to avoid getting ripped off. One of the first things you need to know is the difference between a debt consolidation loan and a debt consolidation service.

Debt Consolidation Loan

Basically, a debt consolidation loan is any low-interest loan that you receive for the express purpose of paying off two or more high-interest debts. For example, if you have three credit cards with annual percentage rates (APRs) of 15%, 20%, and 21%, and outstanding balances of ,000, ,500, and ,000 respectively, your debt is costing you a lot of money.

How do you figure it out? There are lots of websites that give you the figures on how much interest you pay on a given APR for every ,000 in debt. Given the above scenario, here is your breakdown:

15% APR-you pay .50 per month per ,000 of debt
20% APR-you pay .67 per month per ,000 of debt
21% APR-you pay .50 per month per ,000 of debt

Your three credit cards are costing you a total of 2.50 per month in interest charges alone. If you took out a debt consolidation loan (a home equity loan or a personal loan) for the total amount of ,500 and your rate was 7% APR, you could pay off your credit cards. Your new ,500 debt would cost you .83 per ,000 per month, or only .37 per month. Aside from any loan fees, you would save 2.13 per month.

You can do the math and apply for a debt consolidation loan yourself. Just make sure you work with a reputable bank or lender. To be safe, check them out with your local Better Business Bureau.

Debt Consolidation Service

You’ve heard the adsGet out of debt quick! Freedom from debt! We can help! They promise to help you consolidate your debts and pay them off faster.

Unlike a debt consolidation loan, which you can manage yourself, a debt consolidation service acts as an intermediary between you and your creditors. Debt consolidation services are supposed to work with you to organize your finances, and then negotiate with your creditors and convince them to lower your interest rates or offer a settlement. The negotiation is meant to ensure that you can afford to make your payments and you can pay off your debts faster. It also ends harassing calls from creditors and/or collection agencies.

The catch? Except for a very few charitable non-profits, debt consolidation services are designed to make money from you, the customer. Even the most reputable services charge substantial fees. Before you consult adebt consolidation service , you need to carefully consider whether or not you will save enough money to justify the added expense, and whether or not youd be better off calling your creditors yourself.

The fact is that the debt consolidation company has no more leverage over your creditors than you do. And if you choose to communicate with a debt consolidation service, remember these red flags, courtesy of the Federal Trade Commission (http://www.ftc.gov):

1. Scammers may charge, in addition to an up-front fee and a monthly administrative fee, a fee equal to the monthly debt consolidation payment, which is collected from the customers first payment.
2. Scammers overstate the estimated savings to the customer.
3. Their services do not necessarily reduce the consumers monthly payment or total debt.
4. They purport to be non-profit when they are not.
5. Scammers do not make any effort to improve the customers credit record, history, or rating.

If you need help figuring out complex household finances, a reputable debt consolidation service may be helpful. Just remember that its customers like you who make these companies profitable!

Related Debt Consolidate Articles

If you have experienced a loss of job or an injury it is very easy to become over loaded in debt. This is something that happens to people everyday. They get hurt, get laid off, or go through a divorce and end up using credit cards to make up for the cash they don’t have and end up in debt that they find hard to get out of. Using credit cards like they were cash is not a wise solution and with the high interest rates they charge you will find it difficult to get them paid back. If you have found yourself in this situation then this article will give you some help on getting out, if you aren’t there yet, maybe it will prevent it from happening to you.

As I said above it is never a good idea to use credit cards to get through tough times or even as your own form of debt reduction. The high rates will just take you deeper into the abyss of debt and make it harder for you to get out. For most people that file bankruptcy or looking for help with debt consolidation it is credit card debt that caused the problem.

If you are in a program of debt reduction, self imposed or otherwise, you need to concentrate on figuring out ways to lower your cash outflow and the amount of bills you have to pay. Credit cards will do the exact opposite; they will increase your bills and make it even harder.

Here’s an example that we can look at: If a family has bills including their mortgage, insurance, car notes, and other miscellaneous expenses that adds up to over $2300 per month is there any possible way to reduce this? There are a number of ways that one could look into to accomplish this, one way is to look into a mortgage refinance that will help us refinance the home mortgage and bring the other bills into it for one low payment. One of the advantages of doing this is that the mortgage loans are typically lower interest and in many cases may be written off on taxes.

If you take the time to look around you will find loans that will give you cash back, loans that you can take out against the equity in your home, loans like the one above that will allow you to combine everything into one low payment, and many other options.

Just about any debt you owe can be rolled into one payment or at least combined and reduced but anything like utilities, cable, cell phone bills and the like will have to be paid separately. You may be surprised at how much you will be able to reduce your monthly payments with a debt consolidation loan.