Can debt consolidation stop demands from your lenders?

11 May2021

There are several different methods of debt consolidation: for example, loans, 0% interest credit cards, and debt management plans can all bring your debts together so you make just one payment a month.

Not all of these will stop your lenders contacting you. One method that should stop demands from your original lenders is a debt consolidation loan.

How can a debt consolidation loan stop demands from lenders?

Repaying your unsecured debts with a debt consolidation loan involves figuring out how much you owe in total, then taking out a loan that's large enough to cover that figure. You use this larger loan to repay all of your original unsecured debts.

So you shouldn't hear any more from your original lenders - as they will all have their debts repaid in full. You are effectively replacing several smaller debts with one, large one. This means that instead of keeping up with lots of different payments each month, you only need to make one monthly payment.

Click here to learn more about debt consolidation.

When won't a debt consolidation loan stop demands from lenders?

Although you repaid your original lenders in full, it's important to remember that you still need to repay your debt consolidation loan. If you end up falling behind on your payments, you can expect to be contacted by the lender who gave you your debt consolidation loan.

However, you may have a certain degree of freedom when you're deciding on the length of the repayment period - if you arrange to pay the loan back over a longer amount of time, your monthly payments may be smaller (although you may pay more in interest, as you will be paying the debt off for longer). Hopefully, this should help you stay on top of your repayments, so your lender doesn't have to 'chase' you.

It is also important to remember that some of your original lenders may have expected you to pay back your debts over a longer period of time. This means that they will have expected you to pay a certain amount of interest, and some lenders may charge you an 'early repayment fee' as a result.

Find out more about debt consolidation loans here.

Could other types of debt consolidation loan stop lenders' demands?

Debt consolidation on a credit card should stop your original lenders contacting you, since their debt will be repaid when you transfer it to a new card. This is because you are simply 'lumping' all your unsecured debts together on a credit card with a 0% interest introductory period.

If you take part in a professional debt management plan, a debt professional will offer to deal with your lenders for you - and as long as you keep up with your agreed monthly payments, your lenders may be happy to get in touch with them, instead of you, when there's something they need to discuss.

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Tags: debt, debt consolidation, debt consolidation loans, debt advice, debt help, debt management, credit cards

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