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If you are considering debt consolidation, there are a few things that you should know and have explained before you take the plunge. First of all, the type of debt that you have incurred does not matter. There is a consolidation process for everyone and every need.

By the time that most people take the first step towards debt consolidation they are usually very deep in debt. Many aren't even aware of the fact that there is something like that to help them get a clean slate and eventually clean up their credit again.

Debt consolidation programs are also educational and help people find out where they went wrong financially so they don't make the same mistakes in the future. Today especially, so many people are in debt that they can't get out unless they seek help of an outside agency.

Debt consolidation is ideal for people that live paycheck to paycheck. When all of your debt is rolled into one payment with a lower interest rate it becomes much more manageable. Signing up for it is a good faith gesture to creditors. This is a good sign for lenders who then are more willing to work with you to reduce and eliminate your debt.

When a person consolidates their debts what happens is the company that they have chosen to deal with will examine all of the debt involved. It is not uncommon for them to also get in touch with creditors and try to reduce interest rates or eliminate some of the debt. Then they would basically loan the amount to pay off the debt. This would consolidate all of the loans and offer just one payment monthly with lower interest rates.

Often, these agencies can save you quite a bit on your loan balances and also stop you from a possible bankruptcy. These agencies are in the market to make money but they also offer some form of credit counseling as well as credit repair.

You can also tackle debt consolidation on your own but when you get the help of a third party company you get the full service, including making certain that all of the negative marks are removed from your credit report. Debt consolidation is definitely something that you should consider if you are in debt and can not see a way out.