Many people have to consolidate their debt at least once in their lifetime and while some people are able to do it without having to resort to loans, bankruptcy, and IVAs, most do not.  Debt consolidation helps people get their lives under control and helps take care of financial situations that you never meant to get into.  Take heart in knowing that you are not alone in this predicament. 

One way you can consolidate your debt it to take out a debt consolidation loan.  They can be secured or unsecured, and they will take all of your debts to all of your creditors, pay them off, and give you one monthly sum to worry about.  If you do it properly, that one monthly sum will be less than what you have been paying out in the first place.  However, before thinking that a debt consolidation loan is the best thing since slide bread and run out to apply for one, you really need to look at the advantages and disadvantages of this financial course. 

Advantages 

There are a few advantages to taking out a debt consolidation loan that makes them infinitely worth while as compared to struggling the way you are.  Most of the time the interest rates on your unsecured debt is going to be lower on the amount of money that you borrow as compared to what you are paying monthly when you combine all your debt.  Your monthly payments should be reduced overall - otherwise why take out the loan - and you only have one creditor to now deal with.  Additionally, a debt consolidation loan ends all of the annoying and harassing phone calls and letters. 

Disadvantages 

Of course there are disadvantages to taking out a debt consolidation loan.  For one thing, there could be additional fees incurred for setting up the loan in the first place.  You could wind up paying more for your debt in the long run and you'll be paying for it over a longer period of time.  If the loan is a secured loan, you run the risk of losing your property if you default on the loan.  One creditor makes any future negotiating on your loan more difficult, and if all of the interest on the debt was at the beginning of the debt then you could conceivably have paid more interest than you should have. 

Are we saying that a debt consolidation loan is a bad idea? No, we're not saying that at all.  But we do feel that knowing the advantages and disadvantages of a debt consolidation loan is the only way to make the best, most informed decision about whether this loan is right for you.