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The debt consolidation business is based in borrowing money from one lender to pay off outstanding debts with better interest rates, on the other hand this lender will manage the monthly payments to the previous lenders, and one of the most obvious advantages of this system is that the clients just have to deal with a single monthly payment.

These are the steps to consider in the debt consolidation process:

* Add up the monthly payments on the accounts you want to consolidate. * Make a list of interest rates with each of your accounts, and set the average of this rate. * Call your creditors and request cancellation cash balances as of the date it intends to consolidate debts. * The sum of their balance of cancellation should be the initial starting amount for consolidation. View loan options. * The interest rate should be lower than average in their exercise of the previous calculation. * Take into consideration the term of the loan and planning. * Once you have consolidated their debts to avoid entering the same situation. Remember that controlling your finances is in yourself. This applies to individuals, who are now in the countries where there are certain terms that should be taken into account which are called "Toronto terms", because they are words that were established in the World Economic Summit in Toronto in June1988. They were applied to the countries designated by the World Bank as "IDA-only" borrowers who had a very heavy debt, low per capital income and balance of payments problems. These countries should have strong structural adjustment programs supported by the INTERNATIONAL MONETARY FUND.

The Toronto principles are basically two: a) Terms for the debts of the Development Assistance b) The introduction of a menu of conditions for payment of the debt that is not development assistance.

The ODA type of debt have two distinctive characteristics one is 25 years for the maturity and 14 years of extension, other characteristic is that the initial rate will be higher than the default interest rate. Debts different than the Development Assistance ones, the creditors can choose from a menu of 3 payment terms.

Option A: one third of consolidated debt will be cancelled and returned with a remaining maturity of 14 years, including 8-year extension; default interest will be marked by the market.

The other option: twenty five years repayment and fourteen years extension and the market will define the interest rate in case of default.

Last option: The same than the first option (option A) but here the default rates is 3.5 percentage points below the market rate (depending on further reductions)

In December 1991 the Paris Club agreed to add to the menu of concessions to countries with lower incomes, (the Terms of Toronto added) that there are essentially 2 options to reduce debt, plus the option non concessional new conditions of Toronto. The option represents a 50% concession of forgiveness in present value terms in debt service payments, lowering the debt during the consolidation period. Additionally, it was agreed to establish a timetable for consideration of a potential debt reduction. Creditors have indicated willingness to consider restructuring the remaining time when the debt is cancelled on a date not later than 3 or 4 years.