A debt consolidation loan is a single, large loan designed to pay off all your existing debts at once. Instead of paying several creditors, you are left with one creditor.
Key points about consolidation loans:
• Multiple debts are combined into one single debt
• Often comes at a higher interest rate
• Requires that you are NOT over-indebted to qualify
• No legal protection from existing creditors
• If you default, you still face all the original consequences
For consumers who are already over-indebted, debt review is usually the better solution as it provides legal protection and reduced payments.