Debt consolidation is the process by which a consumer exchanges one loan for another taking various factors in to consideration. Factors such as reduction of average interest rate, reduced to one credit payment from multiple creditors, reduction of past interest or penalty charges, obtaining a payment plan as per the capability of an individual and becoming debt free individual at a faster rate.

Advantages
1. Reduction of average interest rate:
Taking multiple credit interest rate (which varies from one credit card to another) in to account will have a high interest when compared to one single credit interest for the whole amount with a low interest rate. So an individual may choose this option to reduce his interest rate.
2. Reduction to one credit payment:
An individual may use many credit cards and pay his bills for all the credit cards. This may need a good management technique depending up on the number of cards in use. If you use more number of credit cards then the planning need to be done more appropriately and executed timely where as if you have one credit card your job is done in a way simple and easily executable. One hence opts to shift from multiple loan payments to one loan payment program replacing all the rest.
3. Reduction of past interest or penalty charges:
One opting for  may go for reduction of past interest or penalty charges paid for the borrowed amount under certain options. Options include high interest rate or penalty charges placed for the credited amount, when the total amount paid in the history till date exceeds the borrowed amount, or if it is a very long duration payment program going for 5 yrs or above. Under each case stated one can reduce the past interest and penalty charges or sometimes even eliminate those and pay only the amount borrowed.
4. Obtaining a payment plan:
This payment plan is given to the consumer  by thoroughly going through the personal needs of an individual, his responsibilities etc after which the debt consolidator restructures the existing plans taken by the consumer.
5. Becoming debt free at a faster rate:
Taking debt consolidation program relieves a person from debts at a faster rate than the usual time, which is required to come out of the debt. Following the plans given by a debt consolidator and proper execution of the plan will surely make an individual debt free and obtain high credit scores.

Disadvantages
1. When applying for a loan to replace another you go under the secured loan payment plan placed against an asset such as a home, car or any belongings. Hence at a risk of closing the loan through the asset placed against the loan.

2. You tend to use your credit cards again since you had paid back the credit amount through another loan. Hence the usage of credit cards ads up to your debts ending