Q: What's the difference between a debt consolidation loan and debt counseling?

A: Debt consolidation can mean a lot of different things. Literally, "to consolidate" means to bring together separate parts into a unified whole -- to unify. Therefore, anything that involves turning several debts into one is technically debt consolidation. From a practical standpoint, this usually means one of two things: (1) Taking out a new loan for the specific purpose of paying off all of your old debts, thus "consolidating" your debts; or (2) Using a credit counseling service (also sometimes referred to as "debt counseling") to consolidate all of your bills into one monthly payment, which you make directly to the credit (debt) counseling company. In this way, "debt counseling" is one method of "debt consolidation."

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