Consolidating with a home equity loan can be risky since your unsecured debt comes secured by your home.
If you can't afford the payments, your home could be foreclosed.
That wouldn't happen if your unpaid debts remained on separate credit cards.
If you hire a debt consolidation company, your loans may not necessarily be consolidated with a loan.
Many people who consolidate their debt often end up back into debt within a short period of time after consolidating.By getting a home equity loan, you can access that cash while still living in your home.There are two types of home equity loans to use for debt consolidation – home equity loans and home equity lines of credit (HELOC).After consolidating your debt, you may feel like your debt burden has lifted.However, it's important to remember that you still have the same amount of debt as before.The loan is used to pay off your debts, then you pay off the new consolidation loan rather than dividing your payments to your creditors.You may be able to take out a debt consolidation on your own using the a home equity loan or a debt consolidation loan from a bank.If you consolidate your debt, it's better to close your old credit card accounts and focus only on paying off your consolidated debt.Some debt consolidation alternatives may allow you to pay off your debt sooner and save money on interest in the process. It can be more difficult, but you can evaluate your debt and funds available to pay off your debt and create a plan to pay off your debts one account at a time. Credit counseling agencies can negotiate a debt repayment plan with your creditors that reduces your interest rate and payment.What's worse is that they have this new debt on top of the debt they've consolidated which compounds the debt problem.This happens because consolidating debt often frees up available credit and many people cannot resist using it.