Article  Debt Consolidation May Be The Answer To Financial Stress There are many different reasons why individuals may find themselves having difficulties in paying off credit cards and other types of debts. Job loss, medical expenses, unforeseen life events and even poor financial management of credit cards can all contribute to debt spiraling out of control. However, through debt consolidation it is possible to combine all these repayments into one monthly payment while still preventing damage to your credit score and future financial well being. Debt consolidation is often misunderstood as a quick fix or an easy and affordable way out of debt. In reality this process will still require a lot of effort and work on the part of the debt holder, including setting up a working, realistic budget and more effectively managing their money. What consolidation of debt is not is actually increasing your debt by requiring you to take out a loan. In fact this debt reduction process allows you to take all your current and existing debts and work them into one account, allowing for one monthly payment that you can successfully budget and plan for. Through this process the debt itself may not change depending on the type of consolidation program, but the period and monthly amounts will.   Companies offering services for consolidation of debt without requiring a loan will work closely with the consumers to develop a better understanding of current financial planning and budgeting. This is usually done through the work of credit counselors that work with you to develop financial goals, plans and management strategies. The debt counselor cannot make decisions for you; rather they can provide you with ideas and proven techniques for debt reduction and elimination that you can then consider. They will be given the authority to negotiate directly with your credit card companies, having the insider knowledge on how to get debt reduced and interest rates lowered to allow repayment to be successful and as quick as possible. Many of the companies offering debt negotiation or credit counseling may also charge a fee for negotiation with your credit card companies to have your interest rates or even payment totals reduced. This fee is offset in the savings that can be obtained through lower interest rates and lower principle balance left to pay. Without the use of the service your debt would continue to grow as interest mounts and minimum payments get harder and harder to make. Another great feature of using a company that offers options for debt consolidation is that you will have a clear time limit as to when your debt will be paid off in full. Unlike constantly revolving balances that only continues to grow, a consolidation arrangement allows you to clearly understand how many months you will have to work to completely eliminate the debt. Not only does this help you in budgeting and planning but it also gives you a definite goal and end in sight. This helps with motivation to stay on the budget as well as a real sense of accomplishment as you see the final payment date approaching over time. Although not everyone with credit card debt will need to use debt consolidation services, it is important to consider prior to missed payments or inability to make the minimum payments. This advanced and early proactive acknowledgement of the issue can provide the counselors with the greatest opportunity to negotiate on your behalf with the creditors. Even if you do not need consolidation of your debt you can still benefit from the ability to look at your budget and develop a working plan on how to repay debts and avoid any further escalation of the problem. Category Finance Author Andy West Add To Favorites Print This Article Email Article To A Friend Post Comments   Rate This Article (1) 1 - Poor2345 - Good678910 - Excellent Added On Thu Jan 14th,2010