For starters let us identify what a secured debt consolidation loan is. This is when you use the equity in your home, which is a loan secured by your home to pay off your other debts usually credit cards and other unsecured debts. Initially this may look like a very easy option to handle a serious and potentially out of control debt situation. You simply aquire the debt consolidation loan enabling you to pay all your debts and then only have one monthly payment, instead of making multiple payments to different creditors throughout the the course of the month.

But let's take a closer look at this situation. First, this should be called 'debt transformation' a method of moving debt from one place to another. In reality what you did was transform your lower risk unsecured debts into higher risk debt that is now secured by your house. This is where the precarious situation begins, because if you run into any monetary problems again that could make you start to miss payments you run the risk of having the bank take your house away. Most individuals don't seriously consider this scenario when taking this approach. People think they resolved their problem by using the equity of their homes to pay off debts, but in reality are positioning themselves for a much larger problem.

Debtors pay off their cards through the debt consolidation loan secured by their home and now carry a balance of zero on these cards. But will not submit to giving the cards up, which somewhere along the line will lead to them being charged on. Using credit cards (plastic) for many debtors is an underlying subconscious addiction, credit card junkies, and the disheartenting fact is many people are in denial about this. Figures have revealed that after five years 80% of people who use this avenue of credit card debt relief find themselves right back in debt with credit cards once again except the second around they have an extra secured payment against their home and run the risk of having to go bankrupt or get foreclosed upon.

At this point you take a peek over your shoulder only to be shocked with a unbearable mountain of credit card debt behind you only to speculate how in the world you got there again. Most of instances it began from that loney credit card you kept around just in case. Shortly thereafter the credit card companies envision you as a higher credit risk and increase your APR up to 28% or more. Upon the interest rate being increased your minimums double and potentially even triple.

At this point you are stuck back in the thick of the unforgiving credit treadmill, however you have a another secured payment that must take precedence over the credit card debt or possibly risk your home being foreclosed. At this point you don't have any equity to get another debt consolidation loan and your debt to credit ratio is so bad making it impossible to get any sort of loan, going bankrupt becomes the simplest road out of this mess. However filing for bankruptcy will mark a very serious scare on your credit report.

I have spoke with hundreds of people over the last 16 years who did just what I described in the previous paragraphs. And every one of them said the same thing. They really did think they were going to be able to control the situation and did not foresee themselves ever getting back into credit card debt again and wished they had someone who would of campaigned against making the move towards a debt consolidation loan.

For most debtors who were cornered in this predicament the best decision at that time would have been to go the route of debt settlement. Even though through settlement the credit score will be lowered it is by far the timeliest method to becoming free of your debts while at the same time saving money.

Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.