Although many people think so, debt relief doesn’t have to mean you’re in trouble. In the case of debt consolidation, it simply means your financial situation has become too complex to handle easily. When paying your creditors makes you feel like a multi-tasking octopus with not enough hands to pay out, debt consolidation might be the right choice for you.

What is debt consolidation?

Debt consolidation is the process of taking your debt payments and consolidating—or combining—them into a single payment. For example, the average American has 2.6 credit cards, according to Gallup. Some people, however, may own four, five or more. Two monthly payments are easy to keep up with, but the more complicated the debt, the more challenging it becomes.

This is where credit card debt consolidation comes in. Instead of four or more credit card payments, your payments are consolidated into a single monthly payment, making debt payback easier to achieve.

How does debt consolidation work?

With debt consolidation services, you can combine all your eligible debt (like your credit cards, for instance, or medical bills) into a loan amount. The debt is paid off by the loan, and you have only the single loan amount to pay.

It’s important to note that this debt relief strategy doesn’t lower the amount you owe. It simply combines your debt into a single loan. It’s less “debt relief” than “debt management.”  Your debt isn’t paid off until the loan itself is paid off.

What’s the difference between secured and unsecured debt consolidation loans?

A debt consolidation loan is no different than any other loan. There are secured loans, which require capital to back the loan (such as a house or car), and unsecured loans, which don’t require capital. Be aware that, if you chose a secured loan and are unable to make the payment, the lender will be able to use the asset as repayment.