Credit problems are affecting more and more people these days. With the economy the way it is, it’s very difficult sometimes to keep a handle on your finances.

If you are one of the many people having debt management issues, you may have to consider debt consolidation to keep your head above water and get some peace of mind back in your life.

Debt consolidation is a way to get your finances under control. Through a consolidation arrangement you can lower the amount of money you pay out each month. And that has got to help.

In some cases, the consolidation company may actually be able to get your creditors to settle for less than what you owe. There are both non-profit and for profit companies available to help you through the consolidation process.

This type of debt consolidation is completely different than taking out a debt consolidation loan. So don’t go into this expecting to have a loan that instantly pays off your other creditors. It doesn’t work like that.

In some cases, a debt consolidation loan could actually leave you worse off financially. If the loan has a higher interest rate than what you were paying you end up paying back more money in the long run.

What debt consolidation will do for you is work with your creditors to work out a repayment plan. They will try to get you a lower interest rate, lower payments, and in some cases, the creditor will adjust the amount you owe to a lesser amount. Another positive is that if you are working on a debt repayment plan the constant calls from creditors will be a thing of the past.

A lot of people prefer to use a non-profit company for their consolidation. It doesn’t really matter which you choose, as long as you understand how the company will be handling your financial affairs.

A debt management company will charge a fee in almost any case they handle. Whether they charge the consumer or the creditors, they all have expenses. A non-profit company doesn’t have any shareholders to keep happy, so the rates they charge are usually quite low and don’t come out of your pocket.

You may feel embarrassed about your financial situation. You don’t need to be! It is pretty common right now for people to get in over their heads with debt. The counselors are there to help you, so get past feeling that way.

Once you have chosen a company to handle your debt consolidation you will receive a debt reduction plan. The plan will explain how your debts and payments will be set up and how long it will take to pay off each debt. It will feel good to see those balances going down every month, won’t it?