Consolidation is often the first solution people turn to if they feel that they have a debt problem. Consolidation is the practise of paying off multiple smaller debts with a single loan.

The monthly repayment of a consolidation loan is generally less than the combined repayments of the debts you have consolidated. The interest payable on a single consolidation loan is almost certainly lower than that being charged by credit and store cards. As such your monthly payments are significantly reduced. 

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Where to start

• Choose the solution – Use the “Which way should I turn” form to get your FREE DEBT REPORT
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Government Advice

The Government's Insolvency Service has also produced a useful guide to personal debt solutions "In Debt - Dealing with your creditors". This and other useful debt solution resources can be viewed in the "Useful Links" box at the bottom of this page.

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If you have two or three credit card balances, very often you will be able to repay these by using a single unsecured loan from your bank. The result is that your debts are consolidated into one single loan.

Unsecured or Secured Consolidation

It is possible to consolidate multiple debts using either an unsecured loan from your bank or by taking a further mortgage or secured loan against your property.

During many of the 2000s when house prices were rising, it was relatively common to release equity from property to consolidate unsecured debt. This practice was useful as the monthly repayments associated with a mortgage over say 25 years were far smaller and more manageable than the sum of the monthly repayments on the individual unsecured debts.

With the onset of the credit crunch, it has been much more difficult to take a secured loan or mortgage to consolidate debt.