In this article, we will be discussing debt consolidation in a simple, easy-to-understand manner. No legal mumbo-jumbo. No financial terms or highly technical stuff. Just the bare facts about debt consolidation in a language that is understandable to everyone.

Here's what debt consolidation is all about…

Let us say you have availed of several loans and you are hard up in paying your loan amortizations. Collection agents are reminding you up left and right. They're leaving subtly uncomforting wordson your answering machine. Worse, you are constantly hounded by the prospect of receiving a bad credit score, which will give birth to further misfortunes. No financial aid is available for you anyway.

How do you react?

Nope, filing a petition for a judicial declaration of bankruptcy should be saved as a last resort

You can instead opt for debt consolidation.

Simply put, debt consolidation refers to the integration of several loans into one loan. Why should this be advantageous for you?

- Often, loans become killer obligationsbecause of their interest rates. With debt consolidation, you can chooseto consolidate all your loans into one loan that charges a lowerinterest rate.

- There are loans with fluctuating interest rates, which makes budgeting quite a hellish experience. With debt consolidation, these loans can be consolidated into a single loan with a fixed interest rate.

- There are instances when debt consolidation provides a new maturity period for the consolidated loan. This can be a great response to several loans that have become due and demandable at the same time.

- Paying off one loan is far moreconvenient that paying off several loans .

To avail of debt consolidation, simply approach any financial institution that offers debt consolidation services. However, bear in mindthat different debt consolidators offer different debt consolidation terms. Here are examples of some of them :

- Simple debt consolidation. This tackles the mere consolidation of several unsecured loans into one secured loan.

- Debt consolidation with security. Here, the debt consolidator will unify several loans into one loan that is secured by a mortgage. A mortgage refers to a property owned by the debtor which he will surrender to the debt consolidator to assure the latter that he will pay the consolidated loan. If the debtordefaults to pay the consolidated loan, then it's bye-bye mortgaged property . The security provided by the mortgage minimizes the risks for the debt consolidator, allowing him to offer the consolidated loan with a more reasonable interest rate.

- Repayment agency. Many saythat debt consolidation is actually a front for companies offering repayment plans. When debtsare consolidated into a single loan, the debt consolidator will actually negotiate with the unsecured debtors for a morefavorable payment scheme to satisfy the debts they have extended.

Indeed, debt consolidation is an option for people who are finding it difficult to cope up with the loans they have gathered.

However, debt consolidation should not be abused . If, for some reason, you will have to file a petition for Chapter 7 bankruptcy, having availed of debt consolidation will heavily affect your chances of being discharged of your unsecured debts.