The Danger of Consolidation
Most consolidation loans are guaranteed with your house. This means that if you don’t pay the company who loaned you the money can take your house. Normally the only loan that is guaranteed with your house is your home mortgage. A loan for a vehicle or credit cards in most circumstances don’t allow the creditor to take your house.
By combining all your debt into one loan and insuring it with the equity in your house, you may place yourself more at risk of losing your home. This isn’t to say that consolidation isn’t a bad idea, but it should be one of the last resorts. The best option is to control your spending before you get to a point where you need a consolidation loan.