Put very simply, debt consolidation involves taking out a loan with which to pay off all your other debts. So, in effect, you replace mutliple regular payments with just one. Seems easy, yes? Perhaps debt consolidation is the best solution for your current situation but it is vital that you take many things into account before going ahead.

A simple example of an unsecured loan is buying something using your credit card. When you authorise payment using your card, you are entering into an agreement to pay back the money you have borrowed based on the contract you signed when you took out the card initially

When you take out a secured personal loan you give the lender rights to property of some kind that may be seized if you stop or get behind with your payments. This ’seizable’ property is known as collateral.

A Debt Management Plan (DMP) is a way of paying off debts that have become out of control because they take up too large a proportion of your income.