When you have a number of debts hanging over your head, trying to keep on top of them can give you many grey hairs. The thing is that, just like a seemingly insignificant hole can fill up a boat with water over a period of time, having a number of loans can sink you as well. How? Take credit card debts for example. Sure, flashing plastic at a shop can be really gratifying. Retail therapy works, and there's nothing like the radiant glow of someone who's shopped and found some great bargains. But getting the huge billing statement at the end of the month can be one giant smack on the face, especially when you find that you can't afford to make anything more than the minimum. Sure, that works. But that's only on one credit card, what about the others? If you are like most people, you undoubtedly have other credit cards in your name. And what about the necessary expenses of daily life, like rent or mortgage payments, car payments, food, water bills, gas? When you add all these payments up, you may find that your salary just can't cover everything. That's when you're in trouble.

For some people, debt consolidation is the most workable solution to their dilemma. Make sure you read through the loan contract before signing anything. Debt consolidation is a way for you to pay off your outstanding debts by taking out one huge loan that covers them all. This loan is called a debt consolidation loan, and it is typically secured against one of your properties, such as your home. Because you put down collateral for the loan, the risk to the bank is lowered, and they are better able to offer you a decent interest rate than an unsecured loan, and for a longer period of time for repayment. It also means that if for any reason you fail to keep up with the payments for the debt consolidation loan, the bank can take the asset you used as collateral. If the asset happens to be your apartment, then you are going to be without a roof over your head.

So debt consolidation is not without risk to yourself. However, there are several advantages to this scheme, such as:

* You will have a single payment to make monthly to one bank, instead of juggling several bills.

* The money that you have to pay monthly can be not as much as the total amount you were paying off beforehand.

* Because it is a secured loan, it has a fixed interest rate.

* Assuming that you keep up with the monthly dues for the debt consolidation loan, your credit score will not be affected, as would have happened if you fail to pay your credit card bills or other loans.

In order to make sure that debt consolidation is your only alternative, do some research beforehand, and speak with a debt advisor or a loan arranger. They may be able to come up with a better plan more suitable to your financial position.]