Debt and bill consolidation is the process by which many debts and bills are turned into fewer debts and bills. Though the terms are often used together, debt and bill consolidation often involve two very different processes and situations. The overall goal is to add convenience, and perhaps save some money during the process. While there may not be any way to consolidate all bills, debt consolidation may be quite comprehensive, depending on what the individual wants and can get approved for.

Recurrent bill consolidation, also called bundling, is most likely to happen when purchasing items of similar service. For example, some companies offer a package for television service, phone and Internet service. These items, which have traditionally been separate from one another, now fall under a broad communications spectrum. Not only does it consolidate bills into one, many companies also offer substantial discounts for those who decide to purchase a package of service products.

Debt consolidation can take place in a number of different ways. Some may try to get debt consolidation loans by using the equity built up in their homes. Sometimes, this may come with an interest rate advantage, because it is possible that previously unsecured loans will now be covered by a secured loan. Others may decide they need the help of a consumer credit counseling service. These services may offer the individual the opportunity to send one check each month, which is then distributed to creditors. Often, these services will work to lower the rates paid as well.

No matter what the strategy taken in debt and bill consolidation, the consumer needs to make sure they understand exactly what will happen. This includes understanding what fees, if any, may be associated with the action. Also, the consumer should ask if the debt and bill consolidation strategy they employ will affect the credit rating of the individual. In most cases, bill consolidation will not affect anything. Debt consolidation may have some impacts, especially if the terms of the loan are changed because the borrower is having trouble paying.

For those who understand these issues, debt and bill consolidation may be the relief they are looking for. In a sense, it can be a way to increase disposable income without actually earning more money. Those who choose debt and bill consolidation should make sure they follow sound money management principles. While consolidating debt can help, those who do not have the discipline to avoid major amounts of debt in the future may find themselves in an even worse situation very quickly.