In this economy, many Americans are turning to Debt Consolidation and Debt Relief companies in order to streamline their finances and fast-track themselves out of debt, whilst making just one affordable monthly payment to the debt consolidation company, who in turn remits payment to your creditors for you. 

In theory it sounds like a great way to ensure you don't miss payments and stay committed to a payment plan to get out of debt.  Debt Management Plans on average last a period of up to four years.  However, you may want to look at the big picture before you take the plunge and embark on a debt consolidation program - it may hurt you more in the long run.

Debt Consolidation companies work with your creditors and negotiate payment terms, often at a discounted or reduced rate of interest and minimum monthly payments and will even negotiate to reduce the total balance of the debt due.  You may be thinking, "Great! Who wouldn't want to pay less interest and reduce their total debt?" but unfortunately, creditors won't view your debt consolidation plans as favorably as you do.

A comment will appear on your credit report notating that you are paying the debt through a debt management program with a credit counseling agency, and that comment will remain on your credit report until the debt is paid off in full.  Since 1999 FICO has ignored information pertaining to the use of a debt consolidation or debt relief agency when calculating FICO scores, however when you apply for credit again in the future, your potential credit provider will see a red flag on your credit report to indicate that you have experienced difficulty managing your credit in the past - and this may prevent you from obtaining credit in the future.  Not many creditors would be pleased about the possibility of them also being subjected in future to negotiations via a debt consolidation company to reduce the amount you owe them, and the interest due on the debt.