Consolidated credit counseling is a service given to people encumbered with several loans and the primary technique is to convert them into one debt that has a lower interest rate.  The duration or term of the new loan may be longer than the previous ones but the amount that you need to come up with each month will be substantially reduced when compared with the total amount that you previously had to pay with the previous debts.  Aside from the lower monthly payment, which makes it much easier to repay the loan, another benefit of these loans obtained through consolidated credit counseling is that you only need to think of one payment and one deadline as opposed to the different due dates that you have to consider with the various loans.  However, caution should also be exercised with regards to the consolidated loan because it often needs you to put up a collateral such as your home.  If this is the case, you could lose your home in the event that you can no longer come up with the monthly payments and you default on your loan.

These consolidated credit counseling companies can also offer the vital service of negotiating with your creditors, especially the providers of credit cards, so that they will agree to forgiving a substantial portion of the outstanding amount that is due.  This is possible because the creditors know that they would not be able to collect anything if the borrower opts to file for bankruptcy.  However, consumers have to be careful because there are some unscrupulous companies and individuals who are exploiting this trend to surprise people with such kinds of promises for their own benefits.  Some of them can charge as high as ,000 right from the start.  What could be worse is that they do not plan to render the service at all but will soon disappear after taking the money.

Another potential disadvantage of getting the services of consolidated credit counseling companies is the possibility of degrading your credit rating.  Some lenders report debtors who have negotiated settlements through the help of these companies as delinquent or late, which brings down their credit scores.  Luckily, some of the lenders simply report to the credit bureaus that borrowers who have negotiated settlements are undergoing credit counseling.  Moreover, credit bureaus no longer take into consideration the report that the borrower is undergoing credit counseling when computing credit scores.  Therefore, this will depend on your particular lender because some do report you as delinquent or late even while you have negotiated a settlement with them. More information can be found at http://thedebtanalyst.com

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