Equity based loan
An equity based loan is one that leverages the equity you have built in your home. With the equity in your home as collateral, the lender has less risk in lending to you. This reduction in risk allows the lender to offer you a lower rate. So, you essentially borrow money at a lower rate to pay off loans and debts that are at a higher rate.

An equity based loan is also favorable in that since you borrow against the equity of your home, the interest may be tax deductible. Contact a lender to get an idea of what they can offer.

Negotiated reduction
A negotiated reduction is where a credit counseling agency will negotiate with creditors to reduce or forgo interest and/or other fees. You then make one payment to the credit counseling agency which in turn makes payments at the negotiated rates to the various lenders. Negotiated reduction does not usually involve any collateral and loans that already depend on collateral cannot usually be included in the debt consolidation.

A negotiated reduction is favorable in that it can help reduce the chance of bankruptcy. It has some strong advantages, but it is an admission that you are unable to pay the debts you have incurred. The original lenders may report to the credit bureaus that they are now being paid via a credit counseling agency.

Knowing what form your debt consolidation will take will bring into focus what type of debts are eligible for consolidation.