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If you find yourself completely immersed in debt, if the phone rings off the hook with collection calls and your mailbox is stuffed with dunning letters, you may want to consider a debt consolidation service. To be perfectly honest, using a service for bad credit debt consolidation should be considered a last ditch effort at a second chance with bankruptcy being the only other option. However, if you find your life is completely dominated by your debt, going this route can give you a way to start digging out from under the debt and start you back on the road to better credit.

So just how does this work? Listed below are the seven most frequently asked questions about debt consolidation and hopefully they will give you the information you need to make a decision.

1. What does a debt consolidation company do?

Debt consolidation is another term for debt settlement and companies who provide this service deal directly with your unsecured creditors (credit cards) to negotiate a lower amount due. You pay an agreed upon single monthly payment to a third party escrow and that money is used to pay out the settlements and the fees of the company. While nothing is guaranteed, you can usually reduce the amount that you owe by 40 to 50 percent.

2. Can I still use my credit cards while going through debt consolidation?

The answer is no. The idea is to reduce your debt not increase it by further use. You will have to start dealing in cash although with the lower monthly payment you’ll be making this will be easier to do.

3. Will my credit score be improved after I complete a debt consolidation?

The answer is no. Your credit report was pretty much trashed when you started the program and it won’t be any better after a settlement. Think about it for a moment, really what you have done is paid 60% or less on that which was due. That doesn’t build a credit score. But completing the program means you no longer are making the monthly payment and you can use that money for secured loans and start building your credit back up.

4. Will creditors stop calling me if I’m in a program?

Probably but there is no guarantee. Reputable debt settlement companies have relationships with credit card companies and can usually convince them to deal directly with them. Your creditor however, has the option to continue collection efforts if they so desire.

5. Can I choose the payment date?

If you are dealing with a reputable credit settlement company you can choose whatever date in the month that is the most convenient for you.

6. How long does this process last until I’m debt free?

Once again there is no guarantee but on average your debt should be totally settled and paid for within 36 months. You can expect that the first settlement should happen sometime in the first 12 months. The amount of your negotiated debt and the amount that you are paying in will determine just how fast the entire debt will be removed.

7. Are credit cards the only kind of debt that this program accepts?

No. Any unsecured debt like medical bills, utility bills, personal loans or retail credit cards can be included. Secured loans like mortgages and car loans can not be settled using this process.

Debt settlement or consolidation is not for everyone but hopefully now you know enough to decide if it is an option worth investigating.

For more information on Debt Consolidation you can visit: Debt Consolidation Headquarters