Debt Consolidation Advice – What Should I Do?

Currently in the UK there are millions of people who are dealing with the aftermath of the economic downturn of having more debt than they can afford. This leaves them looking for some form of debt consolidation advice that will help them to get out from under the mountain of debt that they amassed during the good times. While there are plenty of companies out there who promise you the best debt consolidation help available, the big question for most people is "Can these companies do what they claim and can they be trusted?"

Getting the Right Kind of Help

When people are in over their heads they often start looking for debt consolidation advice to help them get their debts under control and get started back on their way to financial freedom. The big issue at hand is not whether or not there is debt consolidation help available, rather the question is more likely to be "what kind of help is available for my situation and will it really help to get me out of debt?" The answer to that is there are several different avenues of help that you can use depending on the type of debt you have and how far in debt you are.

When most people are staring at bankruptcy debt consolidation may feel like a lifeline being thrown to a drowning man. In all essence that is exactly what it is as long as you follow good sound debt consolidation advice and choose the right way to consolidate your debts into one manageable package. The main idea is to get all of your debts together to where you only have to make one affordable payment on your unsecured debt such as credit cards, leaving you enough money to still be able to live a relatively normal life.

Should I Borrow even More Money?

This is an important question and there are several differing opinions on this based on your particular situation. The first thing you need to do is sit down with a debt consolidation calculator and your bills. You need to know exactly how much you owe now, how much you will have paid when everything is paid off and the total of your monthly payments.

If your unsecured debt is in excess of £15,000 and you have suffered a significant drop in income you may want to consider using an IVA debt consolidation program. The Individual Voluntary Agreement uses an Insolvency Provider who will assess your debt and your income to find out what you can afford to pay each month. He will then work with your creditors to reduce your debt and agree to take a smaller payment until the remaining debt is paid; this is designed to clear your debt in 5 years. While there are fees involved this is a very viable option and will clear up your credit record at the same time.

The other option that many people consider is using the equity in their home to take out a debt consolidation mortgage and pay off their credit cards and other unsecured debt. With this type of loan your credit rating must still be relatively intact and you must have some form of tangible asset that you can put up as collateral for the loan. This type of loan can run to much higher limits, often as high as £75,000 and let you take up to 30 years to pay it off. On the downside, if you default on this type of loan you may forfeit the property you put up as collateral or have a lien put against it for later collection.

The best debt consolidation advice is to take a close look at how far in debt you really are then talk to a specialist at one of the debt relief agencies available across the country. Organizations like the Citizens Advice Bureau will help you find the right answer free of charge so that you can get out from under that mountain of crushing debt and start enjoying life again.