A guide to debt consolidation

A guide to debt consolidation

To help you manage your debt problems you can combine various credit payments into one payment, this is referred to as debt consolidation.

This is normally carried out in two different ways, a secured loan or using an unsecured debt management plan.

A secured debt consolidation loan may be offered to you at a low interest rate as the loan is secured against your house. Although the loan is secure you are permitted to pay unsecured debt with it such as loans, credit card bills, store cards and overdrafts.

It is important to consider that if you do not keep up to date with the loan repayments your home could be at risk of repossession so to pay your debts.

A debt management plan is a way of merging your debt through unsecured methods. It works by negotiating a lower monthly payment for your debts, which is paid via a debt management company and then distributed amongst your unsecured creditors.

This gives consumers the ease and convenience of dealing solely with one company rather than various creditors simultaneously.

The consequence of not paying back your secured consolidation loan as arranged could be disastrous, so it is imperative that you commit fully to paying back your new loan agreement or you may lose your home.

As long as you are in a position to be able to continually afford your repayments then a consolidated payment option is a great way to take back control of your unsecured debts and the worry this can cause.

There is no need to be concerned with various creditors knocking on your door, various payment dates and interest rates. The consolidators will take care of all of this for you.

There is less personal risk to you in regards to your home if you take the unsecured debt consolidation option.

The plan is made informally between the debtor (the person who owes money) and the debtor’s creditors (the person or company the debtor owes money to) and is often suitable for those who have debt greater than £2,000 and do not qualify for an IVA.