For many consumers wearied to the bone of handling a number of separate credit card accounts – having to remember each and every due date and calculate household budgets on the fly – the most tempting part of a debt consolidation program could well be the singularly directed repayment plan. All legitimate debt relief strategies should devise an appropriate strategy that properly remunerates the original lenders while also affording sufficient funds over the course of repayment to also compensate the debt management counselors alleviating the process, but the exact manner and procedures of paying lenders will change according to the methodology of every different debt consolidation program.

While settlement specialists could be paid through a singular charge – roughly estimated as a set portion of the entire sum or a portion of the debt that has been reduced by means of negotiation – incurred simultaneously with formal entrance to the program, it's far more common for borrowers enrolled in a debt consolidation program to pay a little bit each month for the whole of the mutually confirmed schedule of repayment. In the same way, the cash itself will be saved up by the settlement administrators for an eventual payout to the creditors.

One of the primary benefits of combining your debts through an agency offering a debt consolidation program is the guidance and help that a debt counselor can provide their clients. A qualified, knowledgeable agent will assist individuals with every component of the debt consolidation program, beginning with a careful evaluation of a person’s specific debt circumstances in order to ascertain that consolidation is the best plan, or if another alternative is better suited to address your particular financial needs. Another advantage of working with an agency to manage your debts is in the relationship that many of them have with most lending institutions, the terms of which allow them to obtain lower interest rates and fees associated with their clients’ debts. Be sure to ask in advance of signing a debt consolidation program agreement whether an agency will work with your creditors and if they are willing to negotiate rates and other charges.

There are variations distinguishing one debt consolidation program from another, but all basically function the same way: after examining all of your eligible debts, your credit counselor will determine the length of time needed to repay them in full using a single monthly payment. You can expect to pay about two and half percent of your total debt amount, and this figure will remain fixed throughout the duration. Many consumers participating in a debt consolidation program experience a tremendous sense of relief as a result of this simplification of their numerous account demands. Likewise, repaying lenders using debt consolidation in many instances puts a stop to the disturbing barrage of aggressive phone calls and letters from creditors demanding overdue payment.

Within a mutually approved settlement agreement negotiated by a reputable debt consolidation program counselor, the credit card companies will be contractually be bound to report the debt as satisfied upon the final payment of the agreed upon amount. You will need to have all documentation available to prove to the credit reporting agencies – and, in the truly worst case, the civil court authorities – that the funds you have offered up are all that's necessary to see the debts wiped off of your shadow, and that's one of the primary reasons to obtain competent help regarding your settlement consolidation proposal.

Author's Bio: 

Cole Collins is a freelance writer in the field of personal finance with a background in the debt settlement industry. For more information about debt relief please visit