Debt consolidation Vs. Debt management
At Debts 2 Go we are all about solving your debt problems. We want you to get out of debt as quickly and as painlessly as possible.
When people make an application to us we are looking for the best way to help them. Two of the options available are debt consolidation and debt management – but which is best?
Each solution has advantages and disadvantages and a lot will depend upon your personal circumstances. At the moment, with lending slow to say the least, many people will not be able to get a debt consolidation loan. In these circumstances debt management is the only option.
A debt consolidation loan avoids any problems with your credit rating, providing you make the repayments. The downside is that you are paying off all of your debts, plus interest. This means that your monthly repayments are likely to be more than under a debt management plan.
With debt management it is possible to write off a chunk of your debt before restructuring your repayments. This means that the actual amount you are repaying can be considerably less than with a debt consolidation loan.
As an example, imagine your debts total £15,000. With a debt consolidation loan your repayments are going to be based on £15k plus loan interest. With a debt management plan you may be able to reduce the debt to £7,000, with interest frozen, and your repayments will be based upon this figure.
Although a debt management programme will have a negative effect on your credit rating, if you make all of the repayments you will become debt free. Rebuilding your credit rating following successful debt management is relatively straighforward.
Getting a quote for either option, or indeed both so you can compare debt solutions online, is free of charge and without obligation.
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