People get into debt for many reasons and quite often it is due to the fact that they have fallen on hard times. While in work you could have been able to manage your credit card bills and loan repayments from month to month. However perhaps you fell ill or suffered an accident and had to take many months from work. Without full sick pay you might not have been able to get the much needed money together each month to continue meeting your loan and credit card demands. Whatever your reasons for falling behind on your repayments debt is a huge worry and it can be life changing not only for those who have fallen behind but also their family, in some cases debt can tear families apart. If you have fallen into debt could break free if you look into a debt management plan.

One of the ways you could consider sorting out your financial problems is by taking a debt consolidation loan.

Isn’t taking out another loan only going to make the situation worse?

Won’t I be just adding to the amount that I owe?

How can I get a loan, I already have debts and no lender is going to allow me to borrow more money?

Won’t I have to pay a ridiculous amount of interest even if someone will lend me money?

These are all debt questions that are on the minds of people like you and me who are up to their necks in debt and who cannot catch up. Ok so let’s take answer the questions above and more.

A consolidation loan will not make your situation work as you would work out how much you owe and what interest rate you are paying. You would then look for a consolidation loan with a lower rate of interest and borrow the amount of money you owe in total on your credit card and loans.

You then use the money from the loan to pay off all your existing creditors which clears your debts. You then have just one monthly payment to make to one creditor and this repayment comes with a lower rate of interest.

As long as you do not use credit cards or take on any other form of credit while repaying your consolidation loan once the term of the loan has been reached you would have paid off your debt and become debt free.

• If you have credit card or loan debts that come with a very high rate of interest.
• If you want to reduce how much you have to pay out each month.
• If you don’t want the payments to increase each month but need cash for something unexpected.

• If you have already tried consolidating your repayments several time already in the past.
• If you already have a consolidation loan and you also have incurred other forms of credits.
• If you intend spending on credit cards again alongside a consolidation loan.

There are basically two types of consolidation loan, the secured and the unsecured. There are pros and cons to each which would need to be weighed up before taking a loan.

The secured consolidation loan – This type of loan is usually the easiest to get if you are in debt already as to take out the loan you would have to secure something of value against the money you are borrowing. This would usually be your home. If you find you cannot continue repaying the loan and fall behind on the payments without being able to catch up then your home can be taken by the lender. They would repossess it and sell it to get back the money you owe. A secured loan will usually come with the lowest rate of interest and you can generally borrow a larger amount and spread it over a longer term.

The unsecured consolidation loan – The unsecured loan can be hard to get approval for if you are already in debt as lenders are somewhat wary of borrowing you money. Generally the interest rates of an unsecured loan would be higher than that of the secured. However the benefit is that you would not have to put your home up as security and so you would not have the worry of losing it if you were to fall behind on your repayments.