If you are in financial difficulties due to debt or have built up a variety of debts over time, a debt consolidation loan may be for you. But before you take that route, you should consider all the options.

However you got into debt - unexpected financial difficulties, illness, loss of providing member of the family or overspending - you can turn to several organizations and charities for advice. These include the Citizen's Advice Bureaux, the Consumer Credit Counselling service, the Community Legal Service (England and Wales) or call the National Debtline on 0808 808 4000. Remember debt consolidation is one option and you should not feel pressured into taking it. These organizations can help you consider the alternatives.

Your own lenders can also be surprisingly sympathetic about restructuring repayments. Talk to them as well.

Having said that, many borrowers can benefit from consolidating their debts on better interest rate terms. Some credit cards cost up to 17.9 % (e.g. MBNA) and store cards can cost more. Consolidating your debt could cut interest payments by up to two thirds.

It may be more convenient to make one payment rather than several. Or you can improve your cash flow in the short term by reducing monthly outgoings. But this may cost you more over time because you are paying the debt off over a longer period of time.

Be careful if you are borrowing larger sums of money (over £ 25000) as your loan is likely to be secured as a second mortgage rather than an unsecured personal loan. Many adverts make it sound like debt consolidation will solve your financial problems. But taking out a secured loan means you are gambling your house that you can repay the debts. You need to be sure of your ability to repay before doing this.

Most people simply want to consolidate unsecured personal debts, overdrafts or credit cards. Taking out a second mortgage to do this could mean you lose your home if you fail to pay the debt even though you keep up the payments on your first mortgage. You should also consider insuring this kind of loan, although not necessarily with the lending company. You may find a cheaper policy elsewhere.

Make sure you deal with the causes of your debt as well as restructuring your credit. There is little point in taking out a debt consolidation loan if you continue to live beyond your means. If you don't exercise financial discipline you run the risk of getting into the same trouble again in two or three years time.

Before taking out a loan, think about how much you can afford to repay per month. You need to know -

- what the APR is - whether it is variable - what the overall cost of the loan is - if the rate of repayment can change for other reasons - what happens if you miss a payment - what happens if you repay early or refinance - if you have secured the loan on your home, what are the consequences of defaulting - what happens if you decide to move house

Things to be wary of are -

- firms which specialize in debt consolidation; they generally cost more in interest and fees - claims to improve credit records; only you can do this and it takes time - offers to lend extra money, for example, to buy a car; extra debt puts your home at further risk

Finally, shop around for the best credit and payment protection deals. You do not have to get them from the same company and you may not get the best deal if you do.