For renters, your debt is unsecured because no collateral (a home or a car) was used to get the loan. When a debt consolidation company steps in and negotiates the amount owed to creditors, the negotiation will be marked as a settlement. Debt consolidation companies can charge anywhere from 3- 5% of the total debt owed. However, the negotiation will negatively effect your credit rating. The debt will be gone, but the negative credit rating indicates that the debt was not paid back as originally promised. 
For home owners, debt consolidation does not require you to take out a second mortgage loan. Through debt consolidation, you can combine all your loans and other debts into one single payment, making it easier to keep track and hopefully end up costing you less.
Debt consolidation companies extend their debt handling services not only to individuals, but also to business enterprises. Many businesses that have been on the brink of bankruptcy as a result of bad credit have sometimes been pulled back by debt consolidation companies. As a business owner, you can still hold on to your business even in the face of a bad debt, thanks to debt consolidation companies.