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Consolidation

British Sterling Pound GBP Coins And BanknotesWho hasn’t seen an advert for debt consolidation firms on the TV, often as not featuring a debt-laden family finally breathing a huge sigh of relief?

Don’t believe the hype though – debt consolidation is actually just another form of debt; it refers to the taking out of one large loan to pay-off several smaller ones.

It is usually done for several reasons, the most common of which are:

  • To secure better interest rates
  • To secure a fixed interest rate
  • The convenience of repaying one loan only rather than numerous debts of varying sizes

Debt consolidation usually involves a loan that is secured against an asset, most commonly your house. This means that if the debtor fails to keep up their repayments, the asset may become forfeit and a forced sale of the asset – known as foreclosure – is a real risk. In other words, you will lose the asset your loan is secured against – which in this case is your home.

Yet despite the risks, for those with a secure, steady income, debt consolidation can be useful. It is important to shop around when choosing a debt consolidation firm, as some will reduce the size of the overall debt in exchange for their services.

Content on Access Solicitor is not legal advice, and is made available subject to our terms of use. If you need more details on your rights or legal advice try using the Access Solicitor search to find the best lawyer for you.



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