1Stop Money

Bankruptcy

What is Bankruptcy?
The official definition of bankruptcy is “a legally declared inability or impairment of ability, of an individual or organization to pay its creditors” – in other words being unable to pay your debts.
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Debt Management

What is debt management?
Debt management or a debt management plan is a voluntary agreement between you and your creditors, against most unsecured debts, such as credit cards and unsecured loans.
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PPI Claims

Have you ever taken out loans, credit cards, a mortgage or any other financial loans product? If the answer is YES then you could have been wrongly sold Payment Protection Insurance or PPI, without even knowing it.
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Debt Consolidation

What is Debt Consolidation?

One of the most popular debt solutions, debt consolidation is simply the process of taking out one loan in order to pay off a number of others. This is generally done in order to secure a lower interest rate or fixed interest rate, but often simply for the convenience of making one reduced payment each month rather than several, which can be difficult to keep on top of. It can effectively turn many of your debts into one manageable monthly payment.

It is possible to consolidate debts in two ways.

  1. The first allows you to condense any number of unsecured loans into one, unsecured loan with the simplicity of one monthly payment at a slightly better interest rate.
  2. The second option involves a secured loan against an asset such as a house, where the mortgage would be secured against it. The house is then regarded as collateral and as such the loan provider can offer a lower interest rate as the risk to the lender is reduced because of the security of the property (i.e. in the event that the borrower did not pay, the lender can force sale of the property in order to recoup their losses).

There are two main reasons that people choose to take out a debt consolidation loan.

  1. In order to make one payment each month rather than fretting over paying lots of different debts. This way the debts are paid with minimum stress. In addition, many people take on too many credit card debts and so have the stress of paying sometimes as many as 15 different credit card bills. This worry is removed if you get a credit card consolidation loan, that would allow you to make one easy payment instead of many.
  2. Debt consolidation can lower your interest rates and thus reduce your monthly payments considerably.

Consolidating your debts makes it easier to manage your finances, as the number of people you need to pay is reduced to just one. Debt consolidation can make budgeting easier and helps you keep on top of your finances.

If you look at interest rates, for example, if you have 6 credit cards with an APR of 19%, this could be reduced to sometimes as little as 8% APR, allowing for a significant monthly saving with a debt consolidation loan. The saving over an entire year can be extremely helpful in managing your debts.

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