It depends entirely upon the debt consolidation company that you choose to deal with, of course, but what most debt consolidation companies do is take your application for a debt consolidation loan and ask lending institutions to bid on lending you the money.
The debt consolidation company makes money when you make a loan from one of the lenders who work through them.
Most debt consolidation companies offer free debt consultation.
A counselor is assigned to each applicant.
The counselor will call the applicant and talk to him or her by phone.
When the counselor has gleaned all of the knowledge that he needs about the applicant and his or her debt situation, the counselor can often negotiate with the credit card companies to get the interest stopped as well as the harassing phone calls and demanding letters.
The counselor will work with the applicant to determine what the maximum payment amount the applicant can make each month.
The counselor will also work with the applicant to establish a workable budget that the applicant and his or her family can reasonably be expected to live with over the period of several months or years while the debt is being paid off.
The counselor will also obtain the applicant's credit reports.
The counselor will make these credit reports available to the lending institutions that he will be contacting on the behalf of the applicant.
(This prevents too many credit inquires for the applicant.
Multiple credit history inquires raise red flags for lenders, and in this case there will be only one.
) The counselor will then send out your information to several lenders.
The lenders will review the application and credit history.
Some of the lenders may call the applicant on the phone.
Each lender will make an offer to the applicant and the applicant can choose the offer that will best suit his or her needs.