Use a bank loan

If you consolidate debt using the proceeds from a bank loan, it may be a loan that your bank is marketing as a debt consolidation loan or it may be a home equity loan (or line of credit). Or you may obtain a new mortgage that is large enough to pay off the balance on your existing mortgage and to pay off some of your other debts, as well. Here is an overview of how each kind of loan works.

Debt consolidation loan.
This kind of loan may be secured or unsecured. A secured debt is a debt that you have collaterized (guaranteed payment on) by letting the lender put a lien on one of your assets. When a debt is collateralized and you don't pay it, the lender can take the asset you used as collateral. An unsecured debt is one that you simply promise to repay. In other words, you did not secure the loan with asset you currently own. If your finances are in bad shape the lender will require a collateral loan. As a result, if you don`t keep up with the loan payments you will lose your collateral.

Home equity loan.
Getting a homee equity loan involves borrowing against the amount of equity (the difference between what your home is worth now - its market value - and the outstanding balance on your mortgage) that you have in your home and letting the lender put a lien on your home. The lien entitles the lender to put a lein on your home. The lien entitles the lender to take your home if you fall too far behind on your loan payments.