Debt consolidation occurs where you take out a loan in order to pay off two or more existing debts. This Consolidates existing unstructured debt into one personal loan, which in most cases may save on your monthly outgoings while, at the same time, offering easier to manage simpler repayments and a clear end-date to your debt.

You can join any debt consolidation program run by either a loan company or a non – profit organization. I suggest meeting with an independent debt counsellor, then you will be in a position to decide which option is the best for you.

Other options available if your debts are getting out of hand or if debt consolidation isn't for you include. Making a debt management plan with the help of a councillor or as a last resort bankruptcy.

A good Debt Consolidation service, sometimes referred to as a "Debt Management Plan", should have preset arrangements with almost all of the major creditors (mostly credit card companies’ banks etc.) where the interest rate is roughly predetermined. On calling a debt consolidation company, they refer to creditor rate sheet and then give 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 consumer payments if one has multiple creditors.

One thing to be aware of before joining a Debt Consolidation plan, is that you will be required to cancel any and all cards you includes 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 the creditors. On making the new monthly payment, this will stop the creditors from calling and keep them satisfied for the interim.

You will almost certainly be extending the period over which you repay your debt and it may mean that it will cost you more overall so make sure to read the terms and conditions carefully. You must also think carefully before taking out a secured loan, securing other debts against your home. Remember, your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.

Commissions to expect when looking around at debt consolidation companies are roughly your first payment you'd make toward the program plus a monthly administration fee. The monthly admin fee is wholly dependant upon the company you are getting a quote from. Some charge a flat fee while others charge a per creditor fee. Remember to shop around.

A Debt Consolidation Program significantly benefits those who have very high interest rates (above 15%), 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.