Sometimes the hardest thing with unsecured debt is juggling all the different monthly payments and trying to manage the interest and charges. If you miss your payment date and start to receive penalties you can quickly feel swamped by your debt.

A debt consolidation loan which places all of the debt in one, with one monthly payment and one easy monthly interest rate sounds perfect. This is typically called debt consolidation.

It’s a solution where by all of your unsecured debt is consolidated in one payment. It’s easier to manage and will likely be cheaper on your interest rate.

For debt advice, please call a regulated charity:

StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000

Consolidation Debt Solutions

Many debt consolidation loans are not suitable for people with debt problems. It’s for this reason that other debt solutions may be applicable.

You can still:

1. Make one affordable monthly payment towards your debt

2. Stop creditors from contacting you

3. Possibly freeze interest and charges

4. Become debt free

The main difference between a debt consolidation loan and a debt solution, although it’s not the only one, is that a debt solution will usually impair your credit file.

Debt Consolidation

What Is Debt Consolidation?

Debt consolidation is the process of taking your unsecured debt from personal loans, credit cards, overdrafts and other debt and moving it into one place.

For instance, if your debt is

Credit card 1 – Debt: £2,000 – monthly payment: £70

Credit card 2 – Debt: £3,000 – monthly payment: £110

Personal loan – Debt £5,000 – monthly payment £160

Then your debt is £10,000 and you are paying £340 each month towards your debt. If it’s possible to get one loan which consolidates all of these payments and is cheaper, then this could be an ideal solution.

Can I Apply To Consolidate Debt?

Consolidating debt into one loan has become a lot harder because of the credit crunch. If you have defaults on your credit file then applying for credit of £10,000 can be extremely difficult.

Your credit file, the amount of unsecured debt you owe and your personal and financial situation will determine if you can get a loan to consolidate all of your debt.

Another route to consolidate debt is to try and release equity from your house and consolidate the debt into your mortgage.

Remember, if you own your property and release equity from your house in order to pay your unsecured debt the debt will move to being secured. If you are then unable to maintain payments towards your mortgage your house could be at risk. In today’s economic climate it’s not generally a recommended debt solution.

"I Want to Put all my Debts in One Place"

Putting your debts in one place is understandable and the phrase “debt consolidation” is well known. You may have even consolidated all your debt before.

Usually debt consolidation is not a viable option for most people. However, that doesn’t mean you can’t make one monthly payment to one organisation to deal with your debts. Plus, with some debt solutions you are able to freeze your interest and charges, meaning you can affordably repay your debt.