Debt Consolidation Money People Companies Pay Credit Realize

Many Americans "live beyond their means" (spend more money than they make; have an expensive lifestyle they cannot pay for) by using credit cards and loans. "When that catches up with them" (when they have to face the consequences), they are "shocked" (surprised) and "horrified" (surprised in a bad way) to realize how much they are "in debt" (owing money to others). Many people try to change their "spending habits" (the ways people normally spend money), but realize that they need help.

People who are in debt can "turn to" (seek help from) "debt consolidation companies" that help people develop "strategies" (plans) to "consolidate" (combine many things into one thing) their debt. Debt consolidation involves "taking out" (borrowing; getting) one loan and using the money to pay off credit cards, "past-due bills" (bills that have not been paid on time) and other types of debt. The single loan may have a lower interest rate, and it is more convenient to "service" (make payments on) only one loan. In addition, the people no longer receive calls and letters from collection agencies, because their original "credit lines" (sources of money that needs to be paid back) have been "paid off" (paid fully, with no remaining amount due).

Some debt consolidation companies provide additional services, such as "credit counseling," where they educate people about their "finances" (budgeting; money management) and help them find ways to spend less and pay off their debt more quickly. The companies can also assist with "debt settlement," or negotiations to get "creditors" (people and companies that have loaned money) to "write off" (no longer try to collect) part of the amount owed.

The most beneficial debt consolidation companies are "non-profit" (do not try to earn money) and are there to help people. Other debt consolidation companies try to make money from people in debt by providing them these services, but charging very high fees. It is important to find out what kind of debt consolidation company it is before deciding to use its services.