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What is "debt consolidation"

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Debt consolidation is the practice of taking out one large loan to pay off a bunch of smaller debts that are charging higher interest.

Debt consolidation may or may not be a good idea, depending on your situation. Lower interest is a good thing, but turning unsecured debts (like credit card bills) into secured debts (like a home equity loan) can be a costly mistake if you eventually file bankruptcy anyway. Unsecured debts can often be eliminated in bankruptcy, while most secured debts cannot. If you can't pay your secured debt -- or if the payments are late -- you may lose your home.

Also, the fees for setting up such loans can be expensive.


Automatically apply your county expense standards and state income standards to your means test calculation.

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