Bad Credit Debt Consolidation - A Brief Guide

Although the idea of debt consolidation may seem like a last-ditch attempt to dig yourself out of financial difficult, it's actually worth considering if things get really bad (especially if you have the added woes of bad credit to deal with too).

When you've got large amounts of debt, it can often feel like your finances are spiralling out of control as you struggle to cope with all your monthly payments at once; unfortunately, this can often lead to missed payments and that leads to bad credit getting onto your credit history, at which point things usually only get worse.

Thankfully, that's where debt consolidation comes in. As a means of helping people with bad credit out of a hole, it's an option that should really be considered by people who've run into financial difficulty simply by having too many debts to handle at once. There are plenty of debt management firms in the UK today, so it's worth checking around to compare rates and, where applicable, fees; once you've found the best company for your circumstances, you'll be left with one affordable monthly payment instead of many expensive ones.

This amount will be divided between your creditors (the people you owe money to) by the debt management company, who'll negotiate directly with them on your behalf to ensure you're not only better off financially, but left free of the harassment that can come with creditors demanding their money from you.

Obviously, a debt consolidation agreement is the same as any other loan or credit agreement, as you have to keep up the repayments to ensure your creditors are satisfied -- missing payments can lead to money not reaching them, meaning they may come directly to you for the full amount owed.

Providing you can keep the payments up though, debt consolidation can actually improve your credit rating and help you into a position where more conventional borrowing at a better rate is possible. It's also preferable to declaring yourself bankrupt as while bankruptcy obviously has an immediate effect on your debts, it also stays on your credit history for around 6 years and can severely hamper your chances of getting credit in the future.

In Summary...

Bad credit debt consolidation...

* Is a good option for those with bad credit and large amounts of debt
* Combines all your debt into one affordable monthly payment
* Can help to improve your credit rating through regular repayments
* Is easy to apply for and can be approved quickly
* Usually has no up-front fees

By: Martin Mathers

Copyright: Individual Finance, 2010

Individual Finance has informative articles on Bad Credit Debt Consolidation, Bad Credit Loans and many other aspects of UK finance. It also keeps users up to date with the latest money-saving offers and vouchers through regular e-mail newsletters.

Martin Mathers writes for Individual Finance -- he's a professional journalist and writer with 12 years of experience under his belt, covering everything from finance and business to movies, music and technology. http://www.individualfinance.co.uk/bad-credit-debt-consolidation/