A debt consolidation loan is unfortunately the most common solution people think of when they fall into financial difficulties.

Debt consolidation loans supposedly help consumers by consolidating high interest debts into one monthly payment with a lower interest rate and payment amount, which is used to pay off other creditors. These types of loans are usually secured loans such as a home equity line of credit, or mortgage refinancing product.

About 80% of people who get a debt consolidation loan find themselves in more financial trouble they were in to begin with.

Debt consolidation loans will not get you out of financial trouble and most of the time will only make matters worse. Borrowing money to repay "borrowed" money doesn't solve the issue of debt, especially if you're living on a tight monthly budget. That's because robbing Peter to pay Paul doesn't work. The IRS is advising consumers that they are cracking down on these loans and the companies that offer them for not informing consumers on the proper facts and risks.

Debt consolidation companies get paid big commissions for signing you up for these loans. The more they lend, the more money they make. These companies just want to lend you the maximum amount allowed, so they can make the most money. They do not care if the loan is right for you or not.

In recent years, government authorities as well as many financial experts have raised many concerns about the use of debt consolidation loans. Experts believe that a debt reduction though services such as attorney debt negotiation is a much better financial solution. That's because debt negotiation offers the solution to reduce debt without having to risk a home.

In what situations are debt consolidation loans good? If you can qualify for a debt consolidation loan with a much lower interest rate that what you're paying now, a debt consolidation loan may be a money savings strategy to consider. As long as you can already easily afford more than the minimum required payments on the debts in which you intend to consolidate.

If you can barely afford the minimum payments on your current debts, than a debt consolidation product is probably a very bad idea.

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