Do you live in the UK? Do you want to consolidate all your debts into one place? Here are some tips on how to do so, without making your situation worse.
Are you in debt? There’s no shame to it. Any of us who have ever purchased a house, or a car has seen their fair share of debt worries. However, sometimes things can spiral out of control. We all make financial mistakes and that’s OK, too. The point is that you pick yourself up, dust yourself off, and get back to the good life.
One way to do this is to consolidate your debts into one place. We put together this quick guide to help you better understand that debt consolidation process, and how it can help you.
What is Debt Consolidation and Why Do You Need It?
Det consolidation is the process of putting all your debtors into one basket. You can then take out a mass loan which covers the total owed to all debtors at once, thereby easing your monthly payments.
There are pros and cons to this service. It may be that your loan has higher interest than the debts you have already accrued. In this case, you would be adding to your debt. However, this cost will be inconsequential if your debts are large enough to consider amalgamation.
On the other hand, debt consolidation puts every penny into the same pot. You have only one monthly payment, instead of multiple payments. Multiple payments could be putting you overdrawn many times a month, so this can be a huge benefit to those facing massive overdraft charges, hindering their repayment.
How to Consolidate Your Debts?
There are a few options in consolidating your debts. Here are some popular choices.
Debt Consolidation Loans
Debt consolidation loans are the standard way to repay a consolidated debt – but that doesn’t always mean it will be best for you. They come with a monthly payment, a standard interest charge, and a guarantee that you will eventually pay everyone back if you keep up payments.
HELOC
For the first time ever, you can now get a HELOC (that’s a Home Equity Line of Credit) right here in the UK. The scheme was previously only available in the US and Canada, but providers Selina Advance are changing how the UK does credit lines, too. These are a great alternative for debt consolidation when you don’t want to get a consolidation loan.
Debt Management
If you live in the UK and you want to pay off your debts without the added interest of a debt consolidation loan, then you should consider debt management plans, instead. These plans are put together between you and your creditors to organise a method of repayment where your priorities the most critical debts. Since we are in the UK, the Citizen’s Advice Bureaux offers help with these. You can see their page for more information.
Debt Consolidation Methods: A Summary
Regardless of what method you use to repay your debts, you will still have to do so. Debt consolidation is seen as the last step before declaring bankruptcy, which can see you unable to get a credit line at all.
