Debt Consolidation is normally the first option that you will consider if you believe you have a debt problem.
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What is Debt Consolidation?
Consolidation is the practise of paying off multiple smaller debts with a single loan.
It is possible to consolidate multiple debts using either an unsecured loan from your bank or by taking a further mortgage or secured loan against your property.
During much of the 1990s up until 2008 when credit was freely available it was relatively simple to borrow an unsecured loan or to release equity from property to consolidate unsecured debt. This practice was useful as the monthly repayments associated with the new loan were far smaller and more manageable than the sum of the monthly repayments on the individual unsecured debts.
However with the onset of the credit crunch at the end of 2008 it became far more difficult to borrow to consolidate debt.
Government advice about Dealing with Debt
As well as the information found on this website the Government’s Insolvency Service has produced a useful guide to personal debt solutions which you might also find useful: “Options for paying off your debts“.
The Money Advice Service (MAS) are an independent service set up by the Government to provide people with free advice about all aspects of personal finances. For help from MAS if you are struggling with debt please follow this link: MAS – Help if you are struggling with debt.
It is also recommended that you read this one page document produced by MAS entitled “Dealing with debt – 5 things you should know”.
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