Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.
We are a non profit debt consolidation and credit counseling organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.
Most people will tell you that there is not a government debt consolidation program in the USA that offers true debt relief. There are consolidation programs available for student loans and in some cases there may be debt consolidation loans available to help corporations out of debt when it is in the interest of the government to do so. Other than those, it doesn't apear that the federal government offers any type of consolidation services.