IMPORTANT: Make sure you stipulate to your creditors they are not to report you to credit referencing agencies as being 'late' with your payments, if you re-negotiate for lower payments. Then your credit rating will be unaffected.

Take your time. Don't be too eager to settle. Hang the threat of your bankruptcy over their heads.

KEEP WRITTEN RECORDS. Get everything in writing. Phone calls are not legally binding.

Reducing debt becomes a reality with consolidation loans. You can use them to pay off different expenses, ranging from products you bought, to houses or medical bills. In a large majority of cases, these loans are used to pay off credit card debt, which can get quite high in record time due to the interest rates and late fees.

In order to take out a debt consolidation loan you will have to go to a bank, a credit union or some other financial institution and find a good deal. Many finance companies offer competitive programs, so shopping around for a while will only improve your chances of getting the best loan.

The fees on debt consolidation loans are low. This is a major advantage. This allows you to gradually pay off your credit card debt, for example, and reduce interest accruing. Avoiding penalties and missed payment fees is also essential, as that will only push you deeper into debt. It is important, however, to realise that you are still going to have to repay the loan to the financial institution, so getting into even more debt is undesirable.

Eliminate multiple payments. Debt consolidation loans do not only offer lower interest rates, but they are also the most convenient way of paying off debt. Instead of having to deal with multiple creditors, you can simply make one monthly loan payment, which will take care of all your expenses.

Most people using debt consolidation loans find this to be of great help, as it allows them to manage their finances easily. This way, you can also know the exact amount of money that you will have to pay at the end of the month - and this allows you to spend wisely and save enough cash for bills.

Stick with the program. While debt consolidation loans are beneficial, they must be seen as a short or medium term solution. Debt will still be something that will define your financial status until all the money is paid off.

This means that, once the loan is accepted, you will have to create a more disciplined and rational spending pattern, otherwise you risk getting into even more financial difficulties than before.

WARNING: Many clients of debt consolidation companies fall into a state of self-assurance which ultimately pushes them to restart their spending sprees. Debt consolidation services can do wonders for your finances, but only with your help!