Pros and Cons of Consumer Credit Counseling and Debt Consolidation

Similarly, debt consolidation offers hope for debt elimination. Debt consolidation may take different forms, but the eventual goal is the same: the combining of multiple forms of debt into one loan, simplifying budgeting and repayment. There are two types of consolidation loans, secured and unsecured. Secured loans require collateral such as a house, automobile, or some other tangible piece of property the lender may confiscate if payments on the credit stop. The most common types of secured debt consolidation are home equity loans and mortgage refinancing. On the other hand, unsecured loans are personally guaranteed and involve no collateral, so if payments are not made a third party collections company would become involved to secure what is owed.