Debt consolidation companies - and their functions - fall into two distinct parts. The most well known are the people offering you debt consolidation loans. These offer a quick fix but can be quite bad for you if you can't handle the repayments as they will get you into more debt if you don't wipe out your other debts and keep to a strict program of budgeting. The other type of service is offered by what are sometimes called debt consolidation brokers. These professionals offer a structured way of dealing with your debt with one low monthly repayment.

One of the reasons they are sometimes called debt consolidation brokers is that they actually broker your existing debts by approaching your creditors and actually reducing the debt at the start of the service. They can actually take off up to 70 percent off your total debt. And it is from that point that they begin to look at their clients' incomes and outgoings, and then work out a realistic monthly payment to get rid of the debt entirely.

At that point there will be no more nasty calls from creditors, notices of disconnection and politely worded warnings of legal procedures. As long as you have chosen your debt consolidation brokers wisely, all that will now be behind you at a very early stage.

The second main type of service that you should be able to get from debt consolidation brokers is reducing or even eliminating interest. Nowadays, interest rates can be the cause of financial ruin, so it is often the part interest rates have to play that is addressed sooner rather than later.

Reducing or shortening the pay-off time is the third type of service that one should ask about from a debt consolidation broker. Under certain jurisdictions there are fixed terms during which a complete debt, comprising a set of smaller debts, can be expected to be paid off completely. For example, in the U.K. it is five years under the terms of the new Individual Voluntary Agreement laws, after which the debt is written off completely, whether the true capital sum has been paid by this time or not. IVAs are often thought of as a painless alternative to personal bankruptcy because of this.

Lastly, and more of a summary of all these other services, debt consolidation companies can help you gain financial freedom. With massively reduced capital sums and interest rates, lower monthly payments and shortened pay-off time, you're given the luxury of having a stress free time to get on with your life and get things back on track.

The services that debt consolidation brokers offer do vary and so it's always up to you to choose what course of action is most appropriate. It is important that a professional is appointed for the job, a firm that offers all the aspects mentioned above. Your debt counselor is the person who can get you out of your present predicament; with their help you can steer your way back to normality. Isn't that better than just taking out another loan?