What debt consolidation can do for you:

1. Rate reduction: You can reduce the interest rate on your bills and debts through negotiation with creditors. If you want a debt consolidation companyto help you, they'll negotiate on your behalf. Your creditors (or collection agency, if the debt is sold off) will restructure payments so that you can manage your debts better.
   
   For example, if you have three credit cards at interest rates of 18%, 12% and 9%, then the average rate of interest at which you've paying them is:
   
   
   (18% + 12% + 9%)/3 = 13%
   
   Say, after consolidation, the interest rates become 13%, 10% and 7% respectively. Now the average rate of interest becomes:
   
   
   (13% + 10% + 7%)/3 = 10%
   
   Now if you owe $5000 on your credit cards, then the reduced rate of interest would save you $150 per month.
2. Debt repayment plan: You'll get a debt repayment plan from your creditors or collection agencies. The new plan with reduced interest rates will help reduce your bill payments so that you can afford to pay off at least the principal balance in full along with some amount of interest.
   
   The plan is developed such that you don't default while on a debt consolidation program. You'll be able to save money and organize your finances better.
3. Single monthly payment: Consolidation program requires you to make a single monthly payment towards your bills and debts. That is, you make one payment to the consolidation company every month. The company will divide and disburse the funds to all your creditors. So, you don't need to make multiple payments to individual creditors at different rates of interest.
4. Reduction/elimination of late fees: When you default on a debt account, late charges/penalty fees and accrued interest get piled up with time. Such costs can be reduced or even eliminated by negotiation in a debt consolidation program.
5. Get debt free faster: If you pay a little more than the minimum on your credit cards, you'll take comparatively less time to pay off the debt. A consolidation program helps you to make payments such that you don't have to carry on with an account too long. Thus, it accelerates the time period you need to get debt free. With this program, you can eliminate debt in just 4-6 years compared to an average time period of 20 years or more.
6. Get rid of collection calls: The consolidation company negotiates with the creditors and collection agencies on your behalf. This helps you to avoid getting harassing calls from your creditors or collection agencies. They will no longer be able to call you and will be forced to talk to the company only.
7. Improve your credit: Late payments, defaults and charged-off accounts have a negative impact on your credit score. Once you are enrolled in a debt consolidation program, your accounts start getting paid off. This appears on your credit report and helps in raising your score in near future.
   
   When all the accounts are paid in full, the consolidation company negotiates with your creditors and tries to get your accounts reported in your favor.