Choosing the Debt Consolidation Service That's Right for You

A Credit Article Contributed by Mark Mcclelland

What's a Debt Consolidation Service to Begin With?

You'll better understand what a debt consolidation service can do for you if you understand what debt consolidation is. And a good definition of debt consolidation is the process of combining all of the "balances due", on which you make monthly payments to your creditors, into a single larger debt that enables you to make a single monthly payment.

And generally in this situation, the kinds of debts you're combining are your unsecured debts, i.e. you credit card debts, medical bills, and personal (signature) loan debts. Debt consolidation typically doesn't include mortgages, car loans, boat loans, or any other kind of secured debt secured, or taxes or utilities.

So, a debt consolidation service is an organization that can help you do just that, combine multiple unsecured debts into a single larger debt. But these services can also help with other things as well. Reputable debt consolidation services will work with you creditors to help reduce your total debt, reduce the interest rate you'll pay, and possibly have them waive late fees and other charges. They'll also work with both you and your creditors to come up with a repayment plan that both you and your creditors can live with.

Are There Any Alternatives to a Debt Consolidation Service?

But before diving in and selecting a debt consolidation service to help you out of your current financial dilemma, you need consider other alternative. This is especially the case since when you start working with the debt consolidation service to help lower your debt and come up with a repayment plan, your creditors will report this fact to the credit reporting agencies and your credit history becomes, well, be-smirched. No single solution, including using a debt consolidation service is right for all people and circumstances.

For example you might be able to get a second mortgage and use the funds to pay off your creditors. You might consider a second job. You might consider changing your personal spending habits a bit, and using the savings to pay down your debts more rapidly. There are actually quite a number of ways that you can save money by making small changes in your spending habits, and nay of these might suite your situation better than using a debt consolidation service.

But if you've looked around and just can't see any other way, make sure you take the time to find and select the best debt consolidation service you can (and you are going to look around, aren't you? ).

Fee vs. Free Debt Consolidation Service

There are many, many, many debt consolidation services out there...just do a bit of web surfing using "debt consolidation service" as your search term and you'll find page after page of them. And to be sure, some are honest, decent, reputable, and can, in fact, provide you with the kind of help you're looking for. But then again, there are a lot who aren't and can't (not surprised were you? ). There are a lot of scams out there, so it pays to be wary. Even if the service claims to be non-profit, there's no guarantee that that's really the case either.

There are fee-based services, those that'll charge you a fee, and there are "free" services, those that collect commissions or other fees from your creditors rather than from you directly. If you have any choice in the matter, you should select a "free" and non-profit service, understanding that in reality they're not really free at all - they just don't charge you directly when you employ their services.

You can be sure that those that are honest, decent, and reputable all belong to the Association of Independent Consumer Credit Counseling Agencies and / or the National Foundation for Credit Counseling, start looking for them there.