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There are a large number of UK consumers and borrowers who are faced with insurmountable debt problems with no solutions in sight. Most of these individuals usually spend a huge portion of their incomes settling these debts and are finding it difficult to choose between paying them off their or meeting their living expenses.

There are a number of solutions available to individuals overwhelmed by debts. Finding a lasting solution to debt problems is important as failure to do so can have extremely undesirable consequences. One popular and important management solution is debt consolidation. The term consolidation of debt basically refers to a debt solution where the debts owed to various creditors are consolidated into one big one which is then managed by a professional management firm. This is a firm that specializes in providing solutions to debtors and assists them in debt management.

When a debt management firm takes on a client who is looking for help with their debts, they will embark on a thorough assessment of their personal circumstances, and if they believe that consolidation is the most appropriate solution, then they will advise their clients accordingly and embark on implementing the solution.

Once debts owed to various creditors have been consolidated into one, the debt management firm will then assess the best way to pay off the debt. There are two common methods used to manage a consolidation program. A debt consolidation loan is a loan issued by financial firm such as a bank and is used to pay off the consolidated debt. This loan is usually an unsecured loan and is paid to the management firm which then uses the finances to pay off all debts registered in the consolidation of program. Once they have all been paid off, the individual consumer is then left with one manageable, easy, mid term loan that can then be paid off without too much stress. The credit standings or ratings of the person will improve as the creditors who receive payment will report their debts as having been cleared.

The consolidation of debt can also be paid off is small monthly payments that are easy to manage and affordable. The management firm will have to negotiate with the creditors and request lenient terms which usually see the loan amount reduced, interest charges and other charges dropped. Most creditors are happy to have a debt management plan rather than allow a debtor to default. 債務整理