Debt consolidation is the process where you take out a single loan to pay off other existing loans. This can be done to secure a lower interest rate, and hence make lower monthly repayments, or to just to simplify your repayment plans. Unlike debt management, where your previous debts are not cleared, a debt consolidation loan clears old previous debts, once and for all.

Debt consolidation takes a number of forms; either as the conversion of unsecured loans into a new unsecured loan, or debts can be consolidated into a secured loan against an asset, most often a property, which be used as collateral. Because a secured loan offers less risk to the creditor, the interest rate can be lower, and hence a consolidated loan can be cheaper. The risk to you the debtor is that you could lose your home if you fail to keep up repayments.

For most people debt consolidation offers advantages to people with high levels of credit card debt because at the present time credit card interest rates are generally higher than those offered by the banks.

For many people there can be benefits to simplifying your credit commitments and consolidating them into one existing loan, thus potentially:

Reducing financial commitments

Reducing the risk of paying fees due to late payments to one or more of your creditors

Alleviating the stress in having to deal with multiple creditors each month

How Debt Consolidation Works:

Debt consolidation allows you to make a clean start, converting your existing commitments into a single loan payment. We will review your financial circumstances to make sure that a consolidation loan is the best option for you. You should note that a consolidation loan would usually be secured against your home, which would be at risk. Hence, debt consolidation may not be available if your financial difficulties are so severe that your credit rating is adversely affected, and if your debt commitments are very high. Under such circumstances an IVA or bankruptcy procedure through the UK courts may be the most suitable choice for you.

If a debt consolidation plan is the best option for you, your old loans will be paid off and replaced with a new one on more favourable terms, and your previous credit rating should be kept intact. You will then have a new loan with a single monthly payment.

If you still have any questions about a debt consolidation plan, you can can call us. For a non-obligatory review of your finances. All information collected during the procedure is entirely confidential. It's important to us that you aren't kept waiting, and you will hear from us within 24 hours. Should you decide to use our services, in most cases the necessary work can be done over the telephone. However, if this is not possible or you would prefer to meet in person, we can arrange for one of our Senior Advisors to meet with you.