Rent arrears: could debt consolidation help?

20 May2009

If you`re worried about falling behind on your rent payments, it doesn`t necessarily mean you need to find somewhere cheaper to live. In many cases, people find they can`t keep up with their priority debts (such as rent and utility bills) because their non-priority debts (such as credit cards, store cards and unsecured loans) are simply taking up too much of their income.

How can debt consolidation help?

For someone in that situation, a debt consolidation loan might be able to help. It`s a new loan that`s large enough to pay off all their other debts in one go, leaving them with just one monthly debt repayment to make.

Consolidating their debts won`t reduce the actual amount they owe (although the new loan could well come with a lower interest rate than the debts they`ve paid off with it), but it should give them a valuable opportunity - to rethink the rate at which they`re repaying their unsecured debt.

After all, anyone`s circumstances can change. The repayment plan that someone agreed to when they took on a debt two years ago might not seem so realistic today. It could be because their income has dropped, because the cost of living has risen, or because they`ve taken on other debts since then.

Whatever the reason, they might be able to reduce their monthly payments by taking out a debt consolidation loan and using it to pay off their unsecured debts. They`ll be able to take a good look at their finances and figure out how much they can realistically afford to put towards their unsecured debt every month after they`ve taken into account what they need for their rent and other essential bills.

By arranging to pay off their consolidation loan more slowly, they may be able to bring their monthly payments down to an affordable level.

Having said that, repaying any debt more slowly may add to the overall cost, as it will spend longer accruing interest - although the interest rate on the consolidation loan could be significantly lower than the rate on the original debts.

Debt consolidation isn`t the right solution for everyone in debt. If you`d like to discuss your options, you can talk to an expert debt adviser on freephone 0800 195 2911.

Fact: according to the National Landlords Association (`the leading representative body for private-residential landlords in the UK`), 37% of landlords had tenants in arrears at the end of the first quarter of 2009.

A news release from the NLA stressed that people who are having problems paying their rent should contact their landlord - the Association`s chairman, David Salusbury, said that "Landlords and tenants need to communicate and work together to tackle financial problems before they result in a loss of rent and a potential default on [the landlord`s] mortgage repayments."

Try our debt solution finder

Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

Your Situation

Your Details

Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.
We'll give you an on-screen recommendation and call you. One of our advisors will be in touch to answer any questions you may have about your results.
Your privacy is important to us. All correspondence is held in the strictest confidence and we will only request information required to find your debt solution.

Related resources:

Tags: rent, arrears, National Landlords Association, debt, debt consolidation

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

All About Money Limited © 2013. All rights reserved. 42 Boston Rd, Sleaford, Lincolnshire NG34 7ER.