Many people are having credit problems recently with the economy in such a bad state.  More and more people are finding it harder to manage their debts.  If you are one of those people that are finding it difficult to meet your monthly debt payments then you might want to think about a debt consolidation arrangement to get yourself back on the right track.  With debt consolidation you can often reduce the total amount that you owe by combining your debts into one loan.  You will also be able to reduce your monthly payment making it easier for you to meet those demands.  There is a wide variety of debt consolidation options including for-profit companies and non-profit debt consolidation companies.

This type of debt consolidation is different than a debt consolidation loan.  Regardless of whether you opt for a profit or non-profit debt consolidation company, they will not provide you with a loan to pay off your current debts.  Debt consolidation loans can actually be a bad choice in many cases because they may actually have a higher interest rate than what you are currently paying and the only reason your monthly payment is lower is because you have a longer time to pay off the loan.  Although your lower monthly payments might help right now, in the long term you are actually paying back a lot more interest.

Rather than offer you a loan, debt consolidation companies can act as a 'go between' and negotiate with your current creditors to come to a better arrangement than what you currently have.  They will often be able to get you lower interest rates and in some cases they can reduce the total amount that you owe.  By using a debt consolidation company you can often save your credit score from being affected in a negative way.

It is important when choosing a debt consolidation agency that you know how the company will handle your debts and payments.  This is important whether you prefer a non profit company or a for-profit company.  The debt consolidation companies will charge a fee for the service that they provide you.  They spend the time working with both you and your creditors and they need to be paid for their time.  In some instances they can actually incorporate the fee into your monthly debt payments.  Even though a non-profit company still charges a fee, they are generally much cheaper than a for-profit company because they don't have to provide dividends to stockholders.

The debt consolidation company will provide you with a debt reduction plan.  You will then pay the company your monthly payment and they will then divide that payment among your creditors, so even though you still have a few creditors you are only making one monthly payment each month.  A good non-profit debt consolidation agency really can help you to manage your debts, reduce your monthly payments and get you back on your feet financially.