Most people do not realize that there is a large difference between personal debt consolidation and debt negotiation. The fact is that they are not the same and each have their own unique differences.
One of the most important things you can do when you are in debt is to educate yourself. Educate yourself on credit and what happens to your credit when you are in debt. You should also educate yourself on credit and what occurs when you are not in debt. Next, educate yourself on personal debt consolidation and debt negotiation companies. You will find that personal debt consolidation is a lot different from debt negotiation companies and there are marked differences in procedure.
Debt settlement and negotiation companies may actually cause the individual in debt more stress and money than personal debt consolidation would. These companies will typically hold your monthly payments in a trust account. Then they begin to negotiate your debts with your creditors. They may also charge you hundreds of dollars in administration fees and take a percentage of your payments as a fee as well. When you have enough money in your trust account, they will then pay your creditors, but they won't do so until the creditor can be paid in full.
In the meantime, what is happening to your stress level and your credit? Typically, you will still be receiving collection calls, letters and other pieces of mail demanding that you pay your debts. This can be very stressful because you are depending on the debt settlement agency to take care of these, but they won't until you have sent them enough money to pay off your debt. If you are tens of thousands of dollars in debt, imaging how long this can take. Also, during this process, your credit rating is getting mutilated.
An easier and less stressful method of dealing with your debt is through a personal debt consolidation loan. Here your debts are paid off with a loan, from your bank or other lender. This loan is used to pay off your debts at once. Then you begin making a monthly payment that will help you to pay off your debt consolidation loan. Your credit cards, car loans, etc. are paid in full and you only have to worry about the one loan that paid them off. Granted, it may take you a considerably long time to pay this off depending how far in debt you are, but at the same time your credit rating will improve as you make consistent payments to solve your debt problems. No collection calls, no collection letters, no worries.