If you have several debts on loans or credit cards you can normally combine the repayments by borrowing the amount owed through one new debt. It is often possible to reduce interest charges or monthly outgoings by doing this. However, a debt consolidation loan may increase your total debt repayment amount.
Savings can also normally be made by converting unsecured debts to secured debts as interest rates on a secured loan or a re-mortgage are often lower than for unsecured loans or credit cards due to a lower risk of non-payment to the lender. This does, however, put the asset used as security (normally your home), at risk if payments are not maintained in full.
With an IVA, Trust Deed or Bankruptcy a significant part of your debt maybe written-off (depending on your circumstances). However, your credit rating may be affected and you may lose control of your assets.
The following sections contain further detail about consolidating your debt.
Debt Consolidation Explained contains general information only. We strongly advise you to seek qualified professional advice before taking any action.