Debt and bill consolidation is the process of eliminating debt from many loans by taking out one loan that pays off the many loans, thus enabling the debtor to make a single monthly payment on one loan. This helps in paying off the debt at a reduced interest rate, since the new loan would be a secured loan while the earlier loans were unsecured loans, mainly credit card balances.

A free debt and bill consolidation is when such a process is managed and administered by a debt consolidation company free of charge. Normally, the consolidation process is undertaken by the consolidation company for a fee that is charged to the debtors account. A consolidation company charges fees at various stages.

Fees involved in a debt consolidation program are typically a percentage of the total debt to be consolidated. A debtor incurs a fee first when the consolidation company sets up his or her account and does an analysis of the debt situation. The company charges again when they initiate contact with the creditors, and also when they send out letters to the creditors and collection companies to refrain from sending collection letters and embarrassing calls to the debtor. A final service fee falls due on the debtor when the consolidation company actually holds discussions with the creditors to agree to a feasible payment program.

Though the aforementioned need not be the case with every company, it serves to inform the debtor of the fees incurred in debt consolidation. This is an increasing trend in the U.S. where fierce competition among debt consolidation companies has resulted in such companies looking elsewhere for fees than target the already helpless debtor.