Debt Consolidation is the process of merging a number of unsecured loans, typically debts with high-interest balances, into one single lower interest loan.  The problem is that to get a low interest Debt Consolidation loan is very risky because it generally involves trading unsecured debt like you’re your credit cards for a secured loan.  This is typically achieved by getting a mortgage loan and securing your home or other asset as collateral for the mortgage lender. But in the event that you default on any mortgage payment, the collateralization of your loan will allow a mortgage lender to foreclose (force the sale of your asset) in order to force you to pay back the loan.

Another problem with Debt consolidation loans is that they frequently are a temporary treatment to the symptoms of debt, but do not address the root of your problem. Unfortunately, most people that get Debt Consolidation loans have excessive credit card debt because they spend more than they make and statistically, 75% of these consumers eventually reincrease their credit card balances and incur more debt.  Thirdly, getting a Debt Consolidation loan can affect your ability to discharge some of your debts if you file for bankruptcy.