Often, loan consolidation is confused with debt consolidation services, whose offers frequently appear in the mail or through e-mail and are designed for people with severe debt problems. The debt consolidation service renegotiates loan terms with your creditors and consolidates the loans into a single payment through the debt service. The use of a debt consolidation program can hurt your credit rating for a short time frame, but no where near as detrimental as bankruptcy.

Loan consolidations, on the other hand, are generally available only to people with excellent credit ratings, or individuals who choose to risk their home as collateral. Consolidation loans come in many forms, the most common being home equity loans, home equity lines of credit, "cash out" home refinancing, student loan consolidation programs, and personal loans through financial institutions.

Here's how to tell if a debt consolidation service is something you need to consider. Evaluate your financial position: Write down the exact details of your income and expenses for two months. Now add up all your debts and total the minimum payments due on each. Financial planners say if you can afford to pay double the amount of all your minimum payments each month and still put away at least 10 percent of your income in a savings fund for emergencies, you just need a disciplined spending plan so you can accelerate paying off debts. Can you get a cheaper cellphone plan or make do with basic cable? You'd also be surprised at how much you can trim from your monthly out-of-pocket expenses by making a weekly shopping list for groceries and personal-care items and sticking to it. Avoid using credit cards and refrain from unscheduled trips to the ATM. Call each creditor with whom you've been delinquent and ask to work out a re-payment plan, and again, stick to the program. You may not need to render debt consolidation services after all.

Know when to seriously consider debt help: Several of the following factors combined can signal that you need professional debt consolidation help.
• You avoid collection calls because your not sure how to repay or reply.
• If your forced to purchase necessities on credit that you would normally purchase with cash.
• lf you regularly skip some bills to pay others or take credit-card money advances or borrow money to make ends meet until payday.

Your level of debt, your level of discipline and your prospects for increased income are key indicators of the kind of help that's right for you. In addition to simple budgeting and credit counseling--but before bankruptcy--there's debt consolidation services provided by Debt Group America. Be aware that only 33 percent of those who seek our debt consolidation help actually qualify for this service.