Three different ways to deal with debt

Debt consolidation is a term that can encompass any debt solution that places all of your unsecured debts together, leaving you with one monthly payment. You may have heard of debt consolidation loans, which can allow you to consolidate all of your unsecured debts with one loan.

However, debt consolidation loans are only really suitable if you can commit to the monthly repayments for the length of the loan. Two other debt consolidation methods, debt management plans and Individual Voluntary Arrangements (IVAs), can help people with debt problems to consolidate their debts into one monthly payment.

Applying for such program is not difficult but not all are eligible for this kind of financial program. People having bad financial history should always consult the lenders before applying for the Christian Debt Consolidation program. To apply one has to fill in some forms.

Debt management

Debt management is an informal agreement with your lenders that can lower your monthly payments to an affordable level, if you can't afford the payments you originally agreed to make. It is a form of debt consolidation solution that would leave you with one monthly payment - which would be distributed among your lenders, if they agree to allow you to manage your debt this way.

Debt management is only for unsecured debts - so you cannot repay a mortgage this way

Lowering your payments could increase the amount of interest you pay overall because you'll be paying back your debt (and interest) for longer.

Your lenders may agree to freeze the interest on your debt, but changes to your original repayment plan would be recorded on your credit record, potentially making it more difficult to obtain credit for six years into the future.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement with your lenders where you agree to a fixed repayment plan for (usually) five years. An IVA is a form of debt consolidation because it leaves you with one monthly payment for all of your unsecured debts.

You should only apply for an IVA if you can commit to making payments for the full five years - if you can make all the payments you've agreed to, your remaining unsecured debt would be written off at the end of those five years.

An IVA is a form of insolvency and affects your credit record for six years - and if you're a homeowner, you may be asked to release equity in your home so you can pay more to your unsecured lenders, although it shouldn't force the sale of your home.

http://www.thinkmoney.com/debt/debt-consolidation/