What is "debt consolidation"?
With regards to consumer debt, one method of reducing the growth of the debt (not the balance itself) is debt consolidation (here an excellent guide on this topic), in which multiple loans are consolidated into a single loan with a lower interest rate, longer repayment term, or both. When an individual has a bad credit score, qualifying for a new loan can be extremely difficult. However, there are ways to get a debt consolidation loan with bad credit.
Debt consolidation should not be confused with debt settlement, in which an attempt is made to reduce the principal and set on a payout to extinguish the loan. Unfortunately, this is done by defaulting on the debt, which has a disastrous effect on the credit score. This solution must therefore be carefully evaluated and compared to bankruptcy, which is its alternative.
A final approach is to hire the services of a Credit Counseling Agency, which offers advice on how to manage debt and, depending on the individual case, enrollment in a Debt Management Program (DMP), in which the individual makes a single monthly payment to the counseling agency (which will often be formally constituted as a "non-profit" entity), which in turn pays each creditor, while at the same time negotiating for better terms in order to lower the total monthly debt obligation.
For each approach to personal debt relief (getting a single new loan to pay off all current ones, defaulting with debt settlement, signing up for a DMP, or filing for bankruptcy) there are different types of debt consolidation companies providing the service.