With consumer debt levels on the rise in the United States, many individuals find themselves with bad debts that they are struggling to pay off. For some, the only option is to scrape by to make the minimum payments and fail to put a dent in the total debt amount due to interest rates that are through the roof. For others, making the minimum payments is not even an option- they are simply too high to afford. And, if you are a consumer who is facing mortgage and car payments, credit card bills may not be at the top of the priority list. But nevertheless, those payments are an obligation that may be causing a lot of financial stress. The question for the average consumer becomes: what is the best debt relief company out there that caters to my specific circumstances? Luckily, there are several debt consolidation options that provide consumers with assistance for paying off the debt and achieving financial relief.

 Consumer credit counseling is one of the older debt consolidation options. The consumer will make one consolidated payment per month to the company, who will then in turn disperse monthly payments to each of your creditors. Ultimately, the goal of credit counseling companies is to contact your creditors and attempt to get your interest rates lowered. Unfortunately, if they refuse to lower the interest, which they have every right to do, you will be stuck with the same high monthly payment and end up paying back at least the full debt amount.

While credit counseling has been successful for many consumers, the success rate is not considered to be necessarily strong, which is partly because of the nature of the program and also the fact that they are dealing with debtors who are having trouble with their payments.

 Debt settlement is a newer form of debt consolidation available for consumers struggling with debt problems. Again, the consumer makes one consolidated payment to the program per month, and these funds are processed into a trust account and not dispersed. Once enough funds have accumulated in that account, the settlement company will be negotiating with your creditors to attempt to lower the total amount on each of your balances. When successfully settled, the debts can be settled for less than you owe.   Essentially, consumers who are already behind on their payments or for people who anticipate falling behind in the near future are ideal for debt settlement. Because monthly payments are not dispersed in a debt settlement program, there is indeed a negative effect on your credit score and marks from the program can stay on your credit for 7 years. On the flip side of that, the program may improve your debt to income ratio if you manage to graduate from the program and settle your debts as you no longer owe your creditors. The amount of debt that you owe makes up 30% of your credit score and your debt to income ratio is a very important piece of information lenders look at on your credit report to determine how lendable you are. Debt settlement is certainly not the best route for everyone.

The final consolidation option available for debtors is the traditional debt consolidation loan. The consumer gets a loan from a company to pay off their debts, and then pays back the company with monthly payments along with interest. While this may effectively solve the short term problem, essentially you are robbing Peter to pay Paul and have not eliminated the most important issue at hand- eliminating the debt. While you may no longer owe your creditors, you are now stuck with the obligation to pay off the loan, which can be hefty unless you were able to obtain a loan with a much lower payment and interest rate.