They call the credit and try to negociate interest rate reductions and forgiveness of debts.

They usually charge a percentage for this.

You can do it yourself, and save what they charge.

Any debt that is forgiven, counts as income for your taxes, unless it is discharged in a bankruptcy. So that has to be considered.

Your best bet, is to contact a Bankruptcy Attorney, they can do the same negociations, and are a lot more honest about their fees. They can help even if you do not file for Bankruptcy. Usually, their initial consultation is free. They have more negociating power I think since they know the laws quite well, and collection agencies cringe at dealing with bankruptcy attorneys, since a bankruptcy can stay all their contracts and stop all collection efforts except through the bankruptcy court.

Debt Consolidation is a loan that combines all your payments into one, and you normally pay less per month, but a heck of a lot more inthe long run. They tend to keep you in debt longer.

They consolidate your debt to put you deeper in it; with them. It’s just another loan. You may benifit by having one lowered payment each month but it will be over a longer period of time. You will pay more in the long run than you would if you paid for the debt you currently have. If you do not pay more than the minimum you will not get out of debt.

To consolidate debts, you don’t need any helper company. You need to find good balance transfer offers that minimize your interest or, even better, talk to each of your current c/c companies to reduce your interest and offer additional credit line for transfer.
To reduce debts, you generally need a helper company. They negotiate with your creditors, trying to convince them to “forgive” you some part of your debt. Some creditors will do, if they believe that you can stop paying them at all. If this happens, the debt reduction company will take a good chunk of the money you save, and this whole deal will greatly damage your credit record, so you will be paying more for credit for years and years to go.
If you spend less than you make, keep making payments on time and talk to your creditors yourself, you will be out of this hole on your own.
Good luck.

what they do is not pay your creditors for months and then try and settle for less. It will trash your credit and you will be treated as if you have filed bankruptcy if you try to get a home loan.

You can save the fees they charge to do this and do it yourself.

Also, If you use one of these companies and they don’t pay your debt. You, and you alone are still responsible for the debt. Your creditors will sue you and not the company you hired.