Let me clear up a misconception about what a debt consolidation organization can and cannot do for you.
First of all, debt consolidation companies DO NOT PROVIDE LOANS.
If you are looking for a new loan in order to pay off your existing debt, and hence "consolidate" that debt into one large debt, a debt consolidation firm is not who you should be approaching. Your best bet for finding a debt consolidation loan is either through your bank, or perhaps a peer to peer lending site like Prosper Loans.
Aside: Keep in mind that getting a new loan to "pay off" your debts does nothing more than shift that debt from one creditor to another. And if you secure that new loan against your home, your "new" creditor (the bank) can now come after your home if you can't pay the money bank.
What a debt consolidation organization does provide is a different type of service than your bank or a peer to peer lender. Instead of consolidating your actual debt, what is consolidated are your debt payments. Here's how it all works...
The debt consolidator you sign on with will negotiate directly with each of your creditors to try and do four things to help you:
1. Get the creditors to significantly reduce the interest rates that they are currently charging you.
2. Get your creditors to waive any late fees they have already charged you.
3. Get your creditors to waive any penalties on your account and...
4. If necessary, negotiate a lower monthly payment that will allow you to pay down the debt and still meet your daily essential needs like food, shelter, clothing, medical etc.
Once the debt consolidation company that is working for you has done this, they will work with you to prepare a payment schedule (again, it must fit within your budget and your ability to pay) that will involve one monthly debt payment. This debt payment goes to the debt consolidator, who then pays each of your creditors on your behalf.
Is debt consolidation even the best option for you? Do you even need to enroll in any kind of debt relief program? Not sure? My advice is to set up a free consultation with an experienced debt counselor to discuss your situation and work through a plan with you. There are Consumer Credit Counseling Agencies (CCC's) in most cities that will typically offer this service for free. If, after your initial meeting, they refer you on to debt consolidation program or "debt management plan" this is when there are usually fees involved. An alternative option is to have a debt counselor contact you by telephone to discuss your situation and help you work through a solution. Here is one that offers this type of telephone debt counseling for free.
No matter what debt relief option you choose, you have to have realistic expectations. You probably didn't get into debt trouble overnight, so don't expect to get of of debt overnight. It will take time, persistence and "debtermination" on your part. The average time to pay off unsecured debts using debt consolidation is around 60 months.
If you think that debt consolidation might be right for you, check out these tips on choosing the best company to work with.
Alternatively, you can get opinions, help, and company reviews from other folks who are dealing with debt over at debtconsolidationcare.com