Help with Debt Consolidation – Free and Best Options
UK residents can get free debt consolidation help. If you are thinking about using a debt consolidation loan or any other consolidation method, it’s important to get debt advice beforehand.
Uncover where to find it for free and why it’s essential right here.
How can I get all my debt into one payment?
People who have multiple debts with different lenders and companies often ask how they can put all their debt together so they only have one monthly repayment. Instead of juggling different payments throughout the month, having just one monthly payment can make it easier to manage your finances and prevent debts from becoming bigger through missed payments. The good news is that this is possible through a strategy known as debt consolidation.
Debt consolidation is when the debtor takes out new credit – usually a personal loan – and uses the money to pay back all their existing debts. An important part of consolidating is securing new credit with a lower interest rate compared to the interest rates the debtor was paying previously. Because you can save money through debt consolidation, even people who are not financially struggling can benefit from this method.
Debt consolidation loans
Debt consolidation loans are one of the most common ways to secure new credit to pay off debt. These loans are a type of unsecured debt specifically for consolidating debts and are available through banks and online lenders. They usually display a loan calculator on their website to help you compare their product to others using their representative APR.
You can typically use generic loans to consolidate your debts, even when not marketed as debt consolidation loans. Only ever apply for a loan to consolidate debt after reading the terms and conditions, and only apply to lenders that are authorised and regulated by the Financial Conduct Authority (FCA).
Debt consolidation loans are not the only way to get all your debt into one place or one payment. Debt consolidation loan alternatives include:
- Balance transfer credit card (for credit card debts only)
- Remortgaging to release equity to repay existing debts
- Debt Management Plans
What is debt consolidation help?
Before you decide to apply for a debt consolidation loan, it’s important to get debt consolidation help. Free debt advice will ensure you are making a beneficial decision and taking the most effective route to become debt-free. If you don’t make the most of the support available, you could enter into a solution that doesn’t work effectively, or much worse, causes you more financial difficulty and growing arrears.
Various groups offer excellent debt advice that will assess your situation and support you through the process. They’ll also consider your situation against other debt solutions which could help you pay off debts quicker and easier, making sure you don’t miss out on an opportunity.
Debt consolidation loan help usually involves a confidential phone call about your situation and an assessment of your budget. Only by taking into account your exact finances can you truly know what the best debt solution for you really is.
That’s why more free consolidation help services will request you to create a monthly budget before getting in touch. We can help you with that in our budgeting 101 guide!
How to get help with debt consolidation
Debt advice is available through debt advice charities and debt management companies. The key difference between the two is that the former is a free service and the latter comes at initial and potentially ongoing fees. Moreover, the difference between the service is negligible, especially for consolidation assessments. It’s usually a smarter choice to get in touch with a registered debt advice charity.
Some of your options are:
- StepChange Debt Charity
StepChange Debt Charity was previously known as CCCS and is one of the biggest free debt advice providers in the UK, if not the biggest. They are registered in England, Wales and Scotland, providing tailored support over the phone and online through a webchat function with a track record of getting results. Speak to them before deciding to consolidate.
- National Debtline
National Debtline is another reputable free debt advice charity that can put you on a debt-free pathway. They have been operating for over 25 years and also provide over-the-phone and online support based on your exact circumstances.
- Money Helper
Money Helper is a government-backed organisation that has been known by other names in the past. Although they are not exclusively a debt advice charity, they can assist with debt solutions and assess your applicability to consolidating debts and other options.
Only use money advice services regulated by the Financial Conduct Authority.
A word on “Government Debt Consolidation Loans”
Commercial debt management companies offering paid-for services sometimes market those services as government-endorsed, including government-backed consolidation loans. But there is no such thing!
The use of the word “government” only refers to the fact that the government recognises this among many ways to get out of debt. But the products and services you get through them have nothing directly to do with the government at all.
In fact, they are no different from debt consolidation help and services you receive from debt advice charities like StepChange Debt Charity. Don’t be fooled into thinking they are more formal or proper.
Is consolidation the best way to deal with debt?
Consolidation is not right for everyone. Not because consolidating their debts will not help streamline payments or save money – it might – but because there may be a more advantageous debt solution available. It all boils down to specific financial circumstances; there is never one answer for everyone.
Potentially more beneficial debt solutions include a Debt Relied Order for people on a low income or an Individual Voluntary Arrangement. Both methods could wipe some of your debt.
And this is why people in England and Wales should seek debt advice from a registered charity first!
Can I get a debt consolidation loan with poor credit?
If you have a poor credit score you will find it more difficult to access credit than people with a good or excellent credit score. However, it may still be possible for you to be approved for these loans or balance transfer credit cards. You may be offered credit with a higher rate of interest than the representative APR example.
If the interest rate is higher then consolidation may not be worth it anymore. You could speak with debt advice charities again to help you calculate if it is worth it.
A Debt Management Plan is an alternative option for people who cannot access credit. It is an informal agreement with multiple creditors for you to make monthly payments that are split between all lenders. It doesn’t technically consolidate your debt but it does allow you to make paying back easier. Some debt charities will even negotiate this on your behalf. Commercial companies also offer this service but it comes with ongoing fees.
More debt consolidation help and debt advice
We at MoneyNerd have recently published lots of articles on how to merge all your debts together. Search our website now with your consolidation questions and you’ll likely find quick and clear answers.