You would use a bill consolidation company if you have a lot of bills and want to consolidate them into one.  There are a number of reasons why you would want to do this including the fact that you are able to lower the rate that you pay and you might also be able to negotiate the cost of late payment fees.  However, before you rush into any agreement, you need to compare all the different rates and terms they have to offer.  Monitoring your statements is a good idea too because you don't want any errors to slip by.

You might also see bill consolidation companies being referred to as debt management plans (DMP) and basically they can help you deal with short-term debt such as car loans.  The company you use should be able to negotiate a lower rate of interest with your current lender(s).  Frequently you'll be able to have any late payment fees eliminated.

Instead of paying the different creditors their monthly amounts, you simply pay the bill consolidation company who then pay the different lenders.  There will of course be a fee involved but often it's still cost-effective.  However you should note that not all loans are suitable for a cost reduction, for instance mortgages and student loans.

How much you pay in fees can really depend on the individual.  Most of the time, people will pay on a monthly basis however you might pay a fee upfront.  It's probably a better idea to go for the monthly option just in case you decide not to continue the plan.

Another thing that you should be aware of is the fact that many of the lenders will report to the credit agencies that you are using a bill consolidation company.  As a result, you might find it difficult if you are wanting to open bank accounts, apply for credit cards or take out another loan.  The good news is that if you pay on time for a number of months, your credit rating will improve to the point where you might be able to apply for credit again.  A year later you might even find yourself able to apply for a mortgage.

When you are browsing around for the best debt consolidation company to use you are best off looking for one which specializes in this area of debt.  There are some that offer a range of services and they might not be the best to go for.

It's also advisable for you to ask when the account will be fully paid off.  A knowledgeable company will be able to tell you because they know what the current rates are.  Simply give them details of your creditors and how much you owe.

As with most companies, they will all differ greatly in terms of their fees.  So it's important to request quotes for a number of companies rather than just one or two.

If you're the sort of person who is having difficulty with their finances, then you should make sure you also monitor your credit health on a regular basis.  You can do this by contacting the major credit agencies for a copy of any records they have on you.  If you see anything that is wrong then you must let them know so that they can fix it.