Debt consolidation is an effective way for someone who has fallen on hard times with their debt to clear off their debts, and get their credit back to good standing. It works by the debt consolidation company sending a proposal of payment to your creditors, which is simply just a letter, detailing how much you can pay. Creditors usually do not disregard a repayment offer, because at the end of the day, they will be getting their money, so if at the repayment period you have managed to clear your debt, and paid them the money owed, they will still be getting their money back, and seeming to help you at the same time. What normally happens with debt consolidation, is that while your debt is being paid, you wil, ot normally be able to apply for new credit cards, as let's face it if you applied for new credit cards, or loans while you debt is being paid off, there is no guarantee that you will not fall back into the same debt you currently are in the first place. Temporarily your credit score and rating, goes down for a while whilst you are paying off your debts, but this goes back to an even better position once your debt is cleared, as it shows that even though you fell into financial difficulties, you persevered in clearing off your debts, and so credit card and loan companies, will be more than happy to do business with you again.
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