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  Debt Consolidation

Debt consolidation is the process of taking out a loan to pay off several other loans. People often consolidate debt to get a lower interest rate, or to reduce the number of creditors they are dealing with. Debt consolidation can involve rolling several unsecured loans into one secured by an asset, often a house. By securing the loan, the debtor can receive a lower interest rate since the loan is less of a risk to the lender.

Debt consolidation is often suggested for debtors with large amounts of credit card debt, because credit cards have a high interest rates.