A person who in severe financial crisis and at the verge of going bankrupt can seek the assistance of credit consolidation agencies to better plan their financials and find relief from their often dire financial situation.  Credit consolidation referrers to the process of combining all the debts owed by a person so as to pay it off through long term single monthly installments.

Bill consolidation helps you manage all the bills that you have fallen behind on. Through bill consolidation you can pay off your bills at lower interest rates and through  monthly payments.  Bill consolidations are of two types-bill consolidation programs and bill consolidation loans.

In a bill consolidation program, a consolidation company assists you in consolidating all your pending bills and to pay them off.  Credit card bills, utility bills, medical bills, store cards and even personal loans can be paid off through a bill consolidation program.  However, secured debts such as mortgage or a vehicle loan cannot be attached to the program.  The consolidation company will assess your financial situation through debt counseling and will negotiate with the creditors.  After reaching an agreement with the creditors, the counselors will prepare a budget for the debtor, and a repayment plan.  Once the repayment plan is approved by the creditors, the debtor shall start making regular monthly payments.

In a bill consolidation loan, the creditor can apply for a personal loan in order to pay off all the pending bills.  The interest on such loans is usually less than that of the pending bills.  In this way, a debtor can avoid making multiple payments and can pay a single installment each month.

Debt consolidation can also take care of cash advances or payday loans.  These unsecured loans are usually linked to the borrower’s payday, but also carry huge risk to the lender. Debt consolidation who have fallen into the clutches of credit companies through convenience checks.  A convenience check is a check drawn on a person’s credit card which is considered a cash advance.  Interest will start accumulating almost immediately on the convenience check amount. A good debt consolidation program can help alleviate the financial stress from cash advances, payday loans and convenience checks.

Debt consolidation is an ideal way to fight financial crisis and avoid bankruptcy.