Is Debt Consolidation the Answer for Me?

Running up debts from multiple lenders is a fact of life for many households; it is typical to have a couple of credit cards and an overdraft alongside a car loan and maybe another loan or two under credit agreements for the TV or kitchen makeover. Frequently these debts mount to a substantial level of the household income and it only takes a slight change in circumstances to move the financial balance from being manageable to delinquent.

Losing some overtime or even a job can result in catastrophe as debt payments eat up more and more of the family budget and it becomes a real struggle to meet all of your payments as well as settle the household bills. At this point, many people look to see what can be done to arrange their payments so they can establish a less painful monthly payment.

Dealing with the credit card companies and lenders can be a real pain – usually they see any request to reschedule your loan or credit agreement as a sign you are about to go into default and are not prepared to allow reductions in the level of payments. Also having multiple payments to make each month can be a nightmare from just making sure everyone gets their due each month; it makes sense therefore to roll all your debts into one loan and arrange a monthly payment you can comfortably afford. Consolidation loans allow you to pay off all of your debts, make one monthly payment and usually at a much lower rate of interest than you are being charged under your existing agreements.

Consolidation loans are a win-win situation for you – cheaper payments and lower interest charges but you must look at arranging these loans before you start defaulting on any of your payments so it is essential you seek professional advice on your finances sooner and not later. You may find that other solutions like IVA's (what is an IVA), bankruptcy or debt management better.