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Can I consolidate my debts?

The term ‘debt consolidation’ is used in different ways. It is sometimes used to mean the same thing as a ‘debt management plan’. With a debt-management plan, a company helps you to work out affordable debt repayment offers and manages those payments on your behalf.

If this is the kind of arrangement you want to know more about, find more information in our debt-management plan section, or start My Money Steps to find out whether it is a suitable option for you.

The other kind of debt consolidation is a ‘debt consolidation loan’. This involves borrowing more money to pay off your existing debts, leaving you with a new loan to repay. This can mean you have a lower monthly repayment to make each month and that you only have to make one payment instead of lots of payments.

However, it usually means that you have to pay back a lot more in the long term, because of extra interest. If you are already struggling with debt you will usually find it very difficult to borrow extra money. Think carefully about whether you can afford to pay back a new loan if you are already having problems with debt repayments.

My Money Steps will help you to work out your financial statement and see if there are more suitable options available to you.

 

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