If you have a number of outstanding loans and credit card dues, the only thing that can save you from bankruptcy is a debt consolidation loan. Bankruptcy stays on your credit score for several years and you will find it difficult to obtain a fresh loan during all these years. Therefore, it is a wise thing to avoid bankruptcy.

A debt consolidation loan is a new loan that you take out to repay your existing loans. A debt consolidation loan is usually a secured loan whereas credit card dues and other personal loans are usually unsecured loans. Therefore, it is advisable to replace your high rate loans by a low rate debt consolidation loan.

There are several advantages of debt consolidation loans:

· It is easy to manage a single loan since you have to repay the loan to only one lender.

· The rate of interest on a debt consolidation loan is lower than that on unsecured personal loans and credit card dues.

· Since the rate of interest on a debt consolidation loan is low, the amount of monthly installments is also small.

· You can get tax benefits on the interest that you pay on a debt consolidation loan.

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Besides the above mentioned advantages, debt consolidation loans also have a few disadvantages:

· The loan period of a debt consolidation loan is longer than the loan periods of unsecured loans and therefore, you end up paying a larger amount of interest.

· Debt consolidation loans are usually secured against property. If you default in the repayment of a debt consolidation loan, your property may be repossessed by the lender.

There are different types of debt consolidation loans. If you are a homeowner, you can use your house to avail a debt consolidation loan. Since such a loan is a secured loan, it carries a low rate of interest. If your house is already mortgaged, you can get a home equity loan to consolidate your debt. Home equity is the value of your house minus the unpaid mortgage balance. You can also obtain a personal debt consolidation loan. However, the high rate of interest on an unsecured personal loan may defeat the very purpose of debt consolidation.

For More Info on Debt Consolidation Loans you can visit http://www.easy-debt-consolidation-loan.co.uk/