How to Bring Your Debts Together and Take Back Control

If you’re facing letters from lenders, juggling bills, and watching your debt totals climb, you might feel stuck. If you’re thinking about debt consolidation, you’re not alone. Many people across the UK reach a point where managing separate debts such as credit cards, overdrafts, and loans becomes overwhelming.

You might be wondering if combining all your debts into one payment could help. The truth is, it can help, but only if you do it the right way. Making the wrong move could lead to higher costs, more stress, or even put your home at risk.

Let’s talk through what debt consolidation really means, who it helps, and how to do it safely. I want you to walk away with a clear plan and the confidence to make it work for you.

What Debt Consolidation Really Means

Let’s start simple. Debt consolidation means taking out a new credit product such as a loan, card, or plan to pay off your existing debts. This rolls everything together so you only have one payment to make each month.

Imagine all your credit card balances, personal loans, and overdrafts coming together into a single, new monthly payment. Often, the interest rate on this new debt is lower than what you’re paying now. That means you could save money, clear your debt faster, and reduce the stress of keeping track of lots of different payments.

But this is important: consolidating your debt does not make it disappear. You still owe the same amount; you’re just repaying it in a new way.

In plain English: Debt consolidation is about simplifying, not erasing, what you owe.

Is Debt Consolidation Right for You?

Before you jump in, let’s talk about who debt consolidation helps—and who it doesn’t. The best candidates for debt consolidation are people who:

• Have several debts (like cards, overdrafts, and loans)
• Can afford to make a regular monthly payment
• Have a steady income and a fair-to-good credit score

You shouldn’t use debt consolidation if:

• Your debts are very small (under £1,000)
• You have little or no income
• You’re struggling to pay for essentials like rent, food, or energy

If your situation feels desperate, please don’t struggle alone. Free debt advice is available in the UK. Charities like StepChange, National Debtline, and Citizens Advice can support you with confidential, practical advice.

TIP: I have seen that speaking to a debt charity early can often prevent missed payments and help you keep more control over your situation. If you feel overwhelmed, reach out for free advice before making any big decisions.

Different Ways to Consolidate Debt in the UK

There are four main options for consolidating debt. Let’s look at each one—what it means, how it works, and what to watch out for.

Personal Loan

A personal loan is money you borrow from a bank or lender for a fixed period, often with a set interest rate. You use this loan to pay off all your other debts. Then, you only have to pay back the loan itself each month.

• Best for: People with a steady income and decent credit history.
• Watch out for: High fees or interest can apply if your credit score isn’t strong. Always check the total amount you’ll repay, not just the monthly cost.

Balance Transfer Credit Card

A balance transfer card lets you move your existing credit card balances onto a new card, usually at 0% interest for a limited time (often 6–18 months).

• Best for: People with mainly credit card debt, who can clear it within the 0% period.
• Watch out for: Transfer fees (often 3–5% of the balance). If you don’t pay off the debt before the 0% period ends, you could face high interest.

Homeowner Loans (Secured Loans)

This means borrowing against your home to clear your debts. Because your property is security, the interest rate may be lower.

• Best for: Homeowners with significant equity and large debts.
• Warning: If you can’t pay, your home is at risk. Never consolidate unsecured debt (like credit cards) into a secured loan unless you fully understand the risks.

Debt Management Plan (DMP)

A DMP is an informal agreement, often managed by a charity, where you make one monthly payment to cover all your debts. The charity will work with your creditors to try and freeze interest and charges.

• Best for: People with a low credit score or who can’t get a new loan or card.
• Watch out for: Some debt management companies charge high fees. Always choose a non-profit or charity instead.

What Do Lenders Look For?

Before offering you a consolidation product, lenders will check:

• Your credit score: Most require a score of at least 620. Lower scores may mean higher interest.
• Debt-to-income ratio: Your debts should be less than 43% of your income.
• Steady income: You’ll need proof you can pay back what you borrow.
• Debt amount: Most lenders look for at least £5,000 of debt to consolidate.

If you’re turned down, don’t panic. You can try a debt management plan or get free advice to build your credit for next time.

How to Prepare for Debt Consolidation

Before you make any moves, you need a clear picture of your situation. Here’s how to get started:

1. List every debt: Include the balance, interest rate, and minimum payment for each.
2. Add them up: Find your total debt.
3. Check your income and spending: Use a budget planner to see if you can afford the new monthly payment.
4. Check your credit score: You can get a free copy of your credit report online.
5. Gather paperwork: You’ll need payslips, bank statements, and details of your debts.

TIP: I always recommend gathering your paperwork and listing out every debt before applying. This helps you avoid surprises and means you are ready to answer any lender questions quickly.

Choosing the Right Product: Comparing Your Options

When you’re ready to compare consolidation options, focus on these points:

• APR (Annual Percentage Rate): The lower, the better.
• Fees: Watch for arrangement, transfer, and admin fees (typically 1–6%).
• Repayment terms: Make sure you can afford the monthly payment over the full term.
• Flexibility: Can you make extra payments without penalty?
• Provider reputation: Only use FCA-authorised lenders or trusted charities.

Comparison sites like MoneySavingExpert, MoneySuperMarket, and Compare the Market can help you see real rates and fees. Apply to no more than three lenders within six months, as too many applications can hurt your credit score.

How the Application Process Works

Here’s what to expect when you apply:

1. Choose your method: Decide between loan, card, secured loan, or DMP.
2. Apply: Online or in-branch. Give all the information requested.
3. Credit checks: The lender will look at your credit file and income.
4. Approval: If you qualify, the lender may pay off your old debts directly or give you the money to do it.
5. Repay: You start making your new, single monthly payment.

Important: Never pay an upfront fee just to apply. If someone asks for money before approving you, it’s likely a scam.

What To Do Once Your Debts Are Paid Off

Paying off old debts is a relief, but your work isn’t finished yet. Here’s how to stay on track:

• Close or freeze old accounts: Don’t leave credit cards open unless needed for your credit score.
• Set up direct debits: Make sure your new payment goes out on time, every time.
• Budget carefully: Treat your consolidated payment like rent or council tax—it’s not optional.
• Track your progress: Celebrate small wins as your balance drops.
• Try not to borrow more until your consolidation loan or plan is fully repaid.

TIP: I have seen many people succeed by setting up an automatic payment for their consolidation loan. This way, you are much less likely to miss a payment and risk extra fees or a drop in your credit score.

The Biggest Risks and How to Avoid Them

Let’s be honest. Debt consolidation is not a magic fix. Here’s what you must watch for:

• Fees that cancel out your savings: Check all charges before you sign.
• Longer loan terms: A smaller payment over more years often costs more in total.
• Using your home as security: If you can’t pay, your home could be repossessed.
• Falling back into debt: Don’t use paid-off cards for new spending.

If you’re not sure whether it’s right for you, stop and get advice first.

Other Ways to Get Debt Under Control

If debt consolidation isn’t a good fit, you still have options:

• Debt Management Plan (DMP): Offered by charities, not-for-profit, and confidential.
• Debt settlement: Agreeing to pay less than you owe. This can hurt your credit score, so use only if you have no other options.
• Bankruptcy: A last resort, but sometimes necessary for unmanageable debt.
• DIY approaches: Like the snowball (clear smallest debt first) or avalanche (clear highest interest first).

Never consolidate debt if you cannot afford the new payment, or if your debts are secured on your home and you’re at risk of losing it. In these cases, always seek free, professional help.

Bringing Debt Consolidation Together for Your Situation

Debt consolidation can be a powerful step. But it’s not just about a lower monthly payment; it’s about a new mindset. Here’s how you can take back control:

• Know your numbers: Get clear on what you owe and what you earn.
• Be honest about your spending: Make a budget that reflects your reality, not just your hopes.
• Choose a solution you can afford and commit to sticking with it.
• Reach out for help if you need it: No shame, just support.

Remember, you are not your debt. Every step you take to understand your options is a step toward financial security. If you’re ever in doubt, talk to a trusted charity or adviser before you sign anything.

Ready for the next step? Make a list of your debts today, and see how much you could save by consolidating the right way. You’ve got this.