Is a debt consolidation loan a bad thing?

Isn't this a viable option for paying off debt?
Isn't it a good thing to pay off the creditors and have a lower interest rate?
Well, it certainly can be. But it is also quite likely that you enrolled in your credit cards with the intention of paying off those balances each month as well. Good intentions are fine, but unexpected things happen in life.

One of the most critical issues to analyze before taking on a debt consolidation loan will be your ability to weather a financial down turn. I recommend that anyone taking on a debt consolidation loan be very comfortable that should they have a health issue, loss of job or other unfortunate financial surprise that they would remain able to make the payment for some time on the new debt consolidation loan.

To be even more clear, a debt consolidation loan means you "bet the house" that you can repay your credit card debt.
So just ask youself, "do I want to bet the house?".

If a consolidation loan is so dangerous, why would anyone ever enroll in such a plan?

Though interest rates could be quite high, with good enough credit the interest rates on a consolidation loan could also be low. When debt consolidation loans carry a low enough interest rate, the payments can be significantly reduced. And some people may find making one payment can be much more convenient that making five or ten smaller payments.

Even if not the best long term plan, in the short run longer amortizations available with debt consolidation loans can help with cash flow.

It also could be a viable solution if you are already at risk of losing your house due to Bankruptcy. This can be particularly true in states that offer very little in way of homestead exemptions for homeowners in bankruptcy. In some places, the equity in ones home is significantly at risk whether a debt consolidation loan is taken out or not. If you are in such a situation, and the writing is on the wall that you will lose your home unless you can pay off your debts, a debt consolidation loan could be the tool to save your home.