Are you in debt? Tired of answering harassing calls and hating to go to the mailbox because of all the mail from creditors? Don’t know who to pay and for how much? Do you have so many credit cards and not sure how much you owe? In today’s economy, it is so easy to get seriously into debt; and the only way to get out of it is debt consolidation.

What exactly is debt consolidation?

Simply put, debt consolidation is a debt reduction system that allows consumers to combine their assorted unsecured debts into a single payment. Instead of sending out payments on six or seven bank and store credit cards, you could easily make one payment to a consolidation company and that company would then send the funds for you.

This money management system can be highly advantageous to the consumer, as debt consolidation companies generally negotiates:

• Reduced interest rate
• Reduced balance
• Lower monthly payment
• Eliminates late fees

The best part is you are given a set time period when the debt will be paid off in full.

Mortgage loans and car loans are not subject to consolidation since they are secured. Unsecured loans like bank credit cards affiliated with Visa and MasterCard and assorted department store credit cards are the typical items put in a debt consolidation program.

Should debt consolidation be preferred to bankruptcy?

Creditors view consolidation of debt in a better light than bankruptcy. This is because consolidation of a consumer’s debt shows a willingness to put forward a strong, good faith effort to take responsibility and pay for the debt; in contrast, when debtors file for bankruptcy, they opt to erase debt or pay little back, leaving creditors with very little from the debtor.

Although bankruptcy allows consumers to wipe out their debt and start fresh, it also destroys the consumers’ credit background.

When consolidating debt, a consumer can greatly reduce his or her debt, merge multiple payments into one payment, and preserve their credit background by avoiding bankruptcy.

There are ways and means of going about consolidation of consumer debt, by contacting debt consolidation services and applying for consolidation loans. The Internet also lists many companies that are willing to help consumers begin the debt elimination process.