If you are working on getting out of debt and exploring different debt consolidation possibilities you need to be very careful. There are people and companies out there that would be more than happy to take advantage of people in desperate financial situations.

So how do you avoid these debt consolidation minefields?

When you are in debt you're under a lot of stress. You become more likely to explore options that, under better conditions, you would feel are too good to be true and avoid. This stress allows unscropulous people to take advantage of you if you aren't careful.

Here are some debt consolidation scenarios you need to stay away from:

Certain debt counseling companies. While there are legitimate debt counseling companies out there, you need to stay away from those that offer to lend you money to pay off your debts.

Most likely, this money comes in the form of a very high interest rate loan. And more importantly, it's likely that you will be securing the loan with your house. Ouch!

Lenders who offer you a large loan with absolutely no questions asked (no credit check, employment verification, etc.) in exchange for a rather large upfront fee. You'll be charged a high interest rate, a lien will be placed on your home, and your credit history will most likely be damaged even further.

Companies that negotiate and secure a debt consolidation loan for you. They then promise to use the money to pay off your creditors. In turn, you send them a monthly payment on the loan they've secured for you.

In reality, they never get you a loan or pay off your creditors. Instead, your credit history is being damaged, late fees and charges are piling up on your unpaid debt, and your sinking further into the debt hole.

I understand that being in debt causes a lot of stress. It makes certain options look tempting that otherwise wouldn't. But it's extremely important that you take your time, do your homework, and make good, solid decisions regarding debt consolidation options.

If you do this, you'll find yourself on your way to eliminating your debt instead of ending up in worse financial trouble than you are now.