Consolidation
What's Debt Consolidation?
Debt consolidation is a general term used to describe combining multiple debts into a single arrangement or repayment solution.
Some people explore consolidation where they owe money to more than one creditor and are finding it difficult to manage multiple payments. However, whether this is appropriate will depend on individual circumstances, including income, expenditure, total debt level, credit history and assets.
There are different ways debts may be consolidated, and each option has its own risks, costs and implications. Consolidation is not suitable for everyone and may not reduce the total amount repayable.
Credit Counsellor Ltd does not provide financial advice. We provide general information and, if requested, can refer you to an FCA-authorised firm or licensed professional who can assess your circumstances and explain which solutions may be suitable for you.
You should always obtain regulated advice before entering into any debt solution.
Click “DEBT HELP” to start your journey, one of our friendly team will then be in touch to give you all the information you need to deal with your enquiry and refer you to one of our regulated associate experts.
We may pass you onto a FCA regulated debt advice firm for a full advice call who would look into a range of options for you, May not be suitable in all circumstances fees may apply.
We are a debt help lead generation organisation & may be paid a referral fee from the FCA regulated firms.
How Can I Consolidate My Debts?
Debt consolidation can take different forms depending on the type of solution used. Not all debts are treated the same, and some debts may not be eligible for inclusion within certain arrangements.
Before making any decision, it is important that your individual circumstances are properly assessed, including your income, expenditure, assets and total level of debt. Each option carries risks and consequences, and eligibility criteria apply.
Below are examples of formal and informal solutions that may involve combining eligible debts into a single arrangement:
Individual Voluntary Arrangement (IVA)
An IVA is a formal insolvency procedure supervised by a licensed Insolvency Practitioner. If approved by creditors, it allows you to make agreed payments over a fixed period (typically around five years). At the end of the arrangement, any remaining unsecured debt included in the IVA may be written off. Approval is not guaranteed and eligibility criteria apply.
Bankruptcy
Bankruptcy is a formal legal process administered by the Insolvency Service. If you are declared bankrupt, certain debts may be written off, usually after 12 months. Assets such as property or high-value items may be sold, and your credit file will be affected for six years.
Debt Relief Order (DRO)
A Debt Relief Order is designed for individuals with low income, minimal assets and debts below a set threshold. If approved, eligible debts are frozen for 12 months and may be written off at the end of that period, provided your circumstances have not changed.
Debt Management Plan (DMP)
A Debt Management Plan is an informal arrangement where affordable payments are made towards eligible unsecured debts. A third-party provider may distribute payments to creditors on your behalf. Interest and charges are not guaranteed to be frozen, and the plan continues until debts are repaid in full.
Credit Counsellor Ltd does not provide financial or insolvency advice. We provide general information and may introduce you to an FCA-authorised firm or licensed Insolvency Practitioner who can assess your circumstances and advise on suitable options.
You are not obliged to proceed with any solution and may choose any provider of your choice.
Consolidation Loans
A debt consolidation loan involves taking out a new credit agreement and using the funds to repay existing debts, such as credit cards or personal loans. This can result in multiple balances being replaced by a single new account.
A consolidation loan does not reduce the total amount owed. Instead, existing debts are repaid using new borrowing, and the outstanding balance becomes payable to the new lender under the terms of the new agreement.
Before entering into any credit agreement, it is important to understand:
The interest rate and total amount repayable
The repayment term
Any fees or charges
The consequences of missed payments
Lenders will usually carry out a credit assessment, which may include a credit search. This may affect your credit file. Failure to maintain repayments could result in additional charges, further credit file impact, or collection activity.
Debt consolidation loans are not suitable for everyone and may increase the total amount repayable if the repayment term is extended or the interest rate is higher.
Credit Counsellor Ltd does not provide credit broking or financial advice. We provide general information only and may introduce you to an FCA-authorised firm who can assess your circumstances and explain available options.
You should consider obtaining regulated financial advice before entering into any new borrowing.
