A personal debt consolidation loan is one that will aid you in paying off the multiple debts you have.
Since it is just a way of managing your debts and paying them successfully, it is a better option than taking drastic measures like declaring bankruptcy.
Managing several debts through a personal debt consolidation loan is a simple affair.
Your debts may be huge credit card bills or high interest personal loans.
But it is mandatory that you owe £5000 to more than one creditor for availing this loan.
If you do so, then you can approach a debt consolidation agency for getting the loan.
Choose an experienced and reputed agency because your debt consolidation provider will be involved in every aspect of handling your debt repayment.
Repayment of multiple debts through a personal debt consolidation loan works this way.
All your debts are united under a single one.
Your financial condition is evaluated and a workable repayment plan is devised.
For this, the interest rate on the consolidated loan is usually lowered and sometimes, even frozen.
Then, you will be lent an adequate amount that meets the requirements of the repayment plan.
This loan may be either secured or unsecured depending upon whether you can provide collateral or not.
Now, you can start repaying your debts.
Since your debts have been consolidated and your debt consolidation loan providers have lent you the money, they will become your single creditor.
You will be paying the single monthly installments to them and they will disburse it among your previous creditors.
So, all interactions and negotiations with your previous creditors are done on your behalf by your consolidation debt providers.
A personal debt consolidation loan is a feasible way of getting rids of your multiple debts.
You get peace of mind as your debts are reducing month by month.
Also, you will be paying less than what you were originally supposed to.
You can thus save some money for your other needs.
You might also get the chance to avail credit counseling that will give you valuable know-how on how to manage your personal finance.