[3] Debt consolidation is sometimes offered by loan sharks,[4] charging clients exorbitant interest rates.
[10] The overall debt can reach the point where a debtor is in danger of bankruptcy, insolvency, or other fiscal emergency.
Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit.
The overall lower interest rate is an advantage that debt consolidation loan offers to consumers.
Individuals can issue debtors a personal loan that satisfies the outstanding debt and creates a new one on their own terms.
Many other countries, alongside the United States, also have such professional services for the benefit of consumers struggling with household debt.
Student loans in the UK can not be included in bankruptcy, but do not affect a person's credit rating because the repayments are deducted from salary at source by employers, similar to income tax and National Insurance contributions.
In an effort to prevent future defaults, Japan has begun associating loan approvals to academic performance.