You are probably aware of just how much of an impact the easy credit culture that existed prior to 2008 has had on families and people like yourself as we were encouraged to take out credit and pay for our expenses in easy monthly installments rather waiting until you had the cash or taking a big financial hit right now.

Unfortunately the recession and credit crunch has really brought it home to us just how precariously we were living our lives and how much we relied on this easy credit to maintain a lifestyle which, if we were honest to ourselves, we probably couldn’t afford.

The problem is that the debt doesn’t go away, even if you file for bankruptcy you are still obligated to repay some of your debt and you could lose your house and any other assets you have in the process. Of course, you could simply elope but those debt collectors will eventually find you!

Debt consolidation is a tool designed to help you manage the spiraling interest rates, the masses of paperwork that arrive in your mail every day and lower your monthly outgoings to something more manageable. Debt consolidation is a great tool, if it’s used for the right reasons, and can really help to give you some breathing space and take the pressure trying to meet your monthly repayments.

The way it works is you have to shop around for a great low interest personal loan from a bank or a licensed financial services company. The loan is usually secured against an asset like your home which is why the interest rates are fixed and much lower than your credit cards, store cards and other unsecured loans. The fact that the loan is secured against your home means that it is not suitable for everyone and it increases the risk of you being made homeless if you fail to make the repayments.

If you don’t have the time to investigate a consolidation loan or don’t know where to begin, you can talk to a financial advisor who will be able to recommend the best debt consolidation loan for you. Don’t forget though that these advisors usually work on commission so it’s in their interests to sell you a personal loan.

Before you take out a debt consolidation loan be aware that there are disadvantages too, for example if you are turning an unsecured debt in to a secured debt then your home may be at risk if you fail to meet the repayment terms, the term of the loan may be longer and you may end up paying more interest in the long run.