STAY AWAY from any “debt consolidation” program that involves debt settlement. Debt settlement is a risky tactic where you pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

Here is one option:

Entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). They can negotiate lower payments and interest rates. They do not negotiate settlements.

They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.

Generally, debt consolidation does not really save you money. Without knowing what your other debts are, what will probably happen with debt consolidation is that you will be extending the time period to pay off all of your debts. So, your savings may be in monthly payments, but over the length of the pay off, you’ll pay more in interest.

This site: gives you the pros & cons of debt consolidation.

Lower interest rates are not always true. If you use your home as collateral, you could lose your home if you default.