What is Debt Consolidation?

This is known as a debt consolidation loan. This option takes your credit card debt and replaces multiple loans with a single loan. The paymenton this new loan is usually lower and the term is longer, providing some relief to the high interest credit card debt. However, the credit card consolidation path more often than not, uses your home or car or boat as security. This is pretty much a home equity loan or a home equity line of credit.

The Federal Trade Commission (FTC) defenition for Debt Consolidation is: lowering the cost of credit by consolidating your debt through: A. Second mortgage or B. A Home equity line of credit (HEL). These loans require you to secure your home as a collateral. If you don't make the payments - or if you're late - you could lose your home.

In addition, consolidation loans costs can add up. On top of the interest, you sometimes have to pay "points," (One point is equal to one percent of the amount you borrow). yet these loans may provide some tax advantages that are not available with other types of credit.

Source: Federal Trade Commission, "Facts for Consumers"

Some Real Life Facts:

When consolidating unsecured debt with a (secured debt such as a ) home equity loan, you face the risk of losing your hard earned assets should you default on your payments. You will still be liable for the full balance on your unsecured debt and on top of it all, you need to have a low debt-to-income ratio to qualify.

Some Common Debt Settlement Resources

Debt Relief - What does it mean?
...Hiring a company to handle your debt situation is not a weak move, it's an extremely smart financial move... Click here to read more

What are the rules for Debt Settlement
...When the help arrives, one thing will always remain with you, that is to not be back where you started five ten or twenty years from now... Read more

Debt Relief 101
...its not a bird, and not a plane, debt relief is a process that will lead you to a goal. That goal is getting out of debt... Read more