The perceived advantage of debt consolidation loans is that your monthly credit card and other unsecured debt payments will be reduced by obtaining a loan with a lower interest rate, and using the proceeds to pay off the other debts. This is normally accomplished by obtaining an interest bearing collateralized loan or second mortgage.

Most debt consolidation loans require that all of your unsecured debts be consolidated as a condition of the loan. Since the lender, broker or title company does not trust you to pay these debts, they will send full payments to your creditors and you will receive any remaining funds.

Personal secured or home equity loans used for credit card debt and other unsecured debt consolidation can have serious long term consequences. Fixed monthly payments are made for many years, resulting in a total repayment much higher than the original amount financed, and your credit rating is reduced due to your long term loan commitment. If a catastrophe or other event arises that affects your cash flow, you can lose your home and other assets if you default on the monthly payments.

The Debt Jurisprudence™ process is an ideal alternative to debt consolidation loans because you incur no additional debt, your credit score is not affected by the additional debt you incur, nor are you making payments for the term of a loan.

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