Editing Debt consolidation (section)

===Process===
The bulk of the consumer debt, especially that with a high interest, is repaid by a new loan. Most debt consolidation loans are offered from [[Financial institution|lending institutions]] and secured as a [[second mortgage]] or [[home equity line of credit]].<ref name=FTC /> These require the individual to put up a home as [[collateral (finance)|collateral]] and the loan to be less than the [[equity (finance)|equity]] available.

The overall lower interest rate is an advantage that debt consolidation loan offers to consumers. Lenders have fixed costs to process payments and repayment can spread out over a larger period. However, such consolidation loans have costs: fees, interest, and "points" where one point equals to one percent of the amount borrowed. In some countries, these loans may provide certain tax advantages.<ref name=Foxtaxbreaks>{{cite news|last1=Detweiller|first1=Gerri|title=Congress Extends Tax Break for Troubled Homeowners, But Headaches Aren't Over|url=http://www.foxbusiness.com/personal-finance/2014/12/18/congress-extends-tax-break-for-troubled-homeowners-but-headaches-arent-over/|access-date=21 December 2014|work=Fox Business News|date=December 14, 2014}}</ref> Because they are secured, a lender can attempt to seize property if the borrower goes into [[default (finance)|default]].

Personal loans comprise another form of debt consolidation loan. Individuals can issue debtors a [[personal loan]] that satisfies the outstanding debt and creates a new one on their own terms. These loans, often unsecured, are based on the personal relationship rather than collateral.

In United States, there are certain companies and private law firms addressed as debt relief companies and/or debt consolidation companies that provide professional debt consolidation services. A consumer can approach them for debt help and make only one monthly payment to them. This payment will then be disbursed by these companies among the various creditors the consumer is indebted to.
Many other countries, alongside the United States, also have such professional services for the benefit of consumers struggling with [[household debt]]. {{citation needed|date=April 2019}}