Today debts are the common problem among the people, which is growing at a faster rate day by day. Everyone is seeking the ways to overcome the problem of debts. Almost everyday we see the advertisement which offers different packages and schemes that promises to eliminate debts of a person.One of such promise is also made by debt consolidation loan. But, have you ever thought of the funda behind this. The fact is that the company promising to consolidate your debts, merges all your debts, and let you pay a single monthly installment rather than paying number of bills. In other words, the person will deal with single lender rather than dealing with number of creditors.One aspect of personal debt consolidation loan is the single monthly payment and another aspect is lower monthly payment. The second aspect can better illustrate through an example. In personal debt consolidation loan, the lender negotiates with the creditors and appeals them to reduce the amount of debt payment. Remember, that the principal amount of debt is not reduced, the basic reduction lies in the interest rate or the other cost such as penalties on early repayments (if any)etc.There are various other ways to eliminate personal debts such as, through mortgage, remortgage, bankruptcy, individual voluntary agreement etc. But, the bankruptcy and IVA’s are not recommended as they are considered as bad credit for a person. On the other hand consolidating debts through a loan or mortgage, add up to the credit score of a person if timely repayments are made. And good credit score always help the person to avail loan in future.Most of the people have misconception that once they get relieve from the burden of debts they will never get in to it again. But, this is absolutely wrong. Generally, the people are burdened with debts again just of the unplanned expenses. So, in order to avoid such situation the person should plan his budget and make minimum use of credit cards for making payments.Before entering in the agreement with lender, one must be thorough with each and every aspect of the loan. Even a single unfavorable clause in the agreement can affect the borrower credit status. He must understand each cost involve in the loan. And, the person must prefer a loan deal which is cheaper till the last repayment.Shopping around is the best way to ensure the best deal. And before availing, it is also recommended to consult with the credit advisor. He will evaluate credit situation and he will suggest you the mode which has a perfect match with your needs.