Debt consolidation isn't for everyone. It doesn't make sense if you have just a few unsecured loans you can pay off by tightening your budget a bit. It does make sense if your financial worries keep you up at night trying to figure out how you're going to make all your credit card payments, car payment, house payment and other payments and keep food on the table.

Debt consolidation is simply taking a new loan and paying off all your debts, or as many of them as feasible. The new loan can be obtained in several ways.

Apply for a credit card with an available credit balance substantial enough to cover your debts. Then transfer the balance of each of your old cards to the new card. Make sure that the interest rate on the new card is low and doesn't expire after a limited time period. Most people who are considering debt help may not be able to take advantage of this method. They won't qualify for enough credit or for a low enough interest rate.

If you have a home with equity built up. You can refinance the mortgage and use the proceeds to pay off your credit card debt and other debts. Usually mortgage rates are much lower than credit card rates. And of course the term, or length of the mortgage, is much longer so your new payment will be significantly lower than the total of your old payments.

A home equity loan is another alternative. The original lender may be willing to provide a home equity loan or a new lender may be interested. Again since the term for the home equity loan is longer, your payment will be lower.

There are companies that provide debt consolidation loans as a service, either lending money directly or acting as a broker and finding you a lender. In most cases the debt consolidation loan must be secured against an asset: your home, car, or bank account.

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