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Consolidating debts into one new loan could help reduce your monthly outgoings to a level you can afford.

This page gives you an overview of how Debt Consolidation works. Call 0800 1804 933 for specific advice.

What is Debt Consolidation?

Debt Consolidation usually means taking out a new loan or re-mortgage to clear all your other debts. People with debts can sometimes reduce their monthly outgoings by consolidating expensive credit cards, store cards and personal loans into one new deal.

Benefits of Consolidating Debts

  • You may be able to reduce your monthly outgoings by taking the new loan or remortgage over a longer term.
  • You may get a better interest rate on a consolidation loan than you currently have on your credit cards and store cards.
  • You will only have one monthly payment to make.

Ways to Consolidate Your Debts

Depending on your circumstances, you may be able to consolidate your debts with;

  • An Unsecured Loan
  • A Secured Loan – you must own your home
  • A Re-Mortgage – you must own your home

 

Each of the above will have specific benefits and disadvantages. If you don't have sufficient equity in your home, you will only be able to consider an unsecured loan. Unsecured loans are likely to have higher interest rates than loans secured against a property.

Problems with Debt Consolidation

In the last few years it has become increasingly difficult to obtain Consolidation loans. Lenders are likely to have very strict lending criteria.

You may have problems getting a consolidation loan if you have missed payments on your existing credit cards, store cards or loans. If you have had any County Court Judgments (CCJ’s), Defaults or Mortgage Arrears it is highly unlikely you will be able to consolidate debts into a new loan.

Alternatives to Debt Consolidation

In many cases, consolidating your debts into a new loan will not be the best option. If you are struggling with monthly payments borrowing more money might worsen the problem.
Depending on your circumstances, you could consider;

  • IVA – Individual Voluntary Arrangement
  • Debt Management Plan
  • Debt Relief Order
  • Bankruptcy

 

You should always take advice at an early stage to make sure you understand the implications of all available debt solutions. Crucially, you should think very carefully before taking out new credit.

What to do next

Call us free on 0800 1804 933 for specific advice; we'll talk you through all the options and help you decide which is the best debt solution for you.

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Anderson Brookes Ltd

Anderson Brookes Ltd provides advice to individuals, business owners and company directors that are struggling with debt. Anderson Brookes Ltd is Authorised and Regulated by the Financial Conduct Authority; our registration number is 669796. You can confirm our details on the FCA website www.fca.org.uk. Anderson Brookes Ltd is a limited company registered in England and Wales; company registration number is 4213701. You can read more about the services provided by Anderson Brookes Ltd by visiting OUR SERVICES. A printed copy of our Initial Disclosure Document will be provided to you before any Instructions are accepted from you. You can request a copy at any time by calling 01204 255 051. Some of the services provided by Anderson Brookes Ltd are not regulated by the Financial Conduct Authority.

Anderson Brookes Insolvency Practitioners Ltd

Anderson Brookes Insolvency Practitioners Ltd is a limited company registered in England and Wales; company registration number is 10324159. Registered office address is 4th Floor, Churchgate House, Bolton, Lancashire BL1 1HL. Brendan P Hogan is licensed to act as an Insolvency Practitioner in the UK by the Insolvency Practitioners Association. Licence Number 101680.