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Consolidating debt with poor credit can often feel like being stuck between a rock and a hard place. You’re in debt, you have multiple repayments per month and it’s getting unmanageable. You’ve heard that debt consolidation loans can make things easier, but your credit rating is poor and it seems the only loan providers who will give you credit want to charge a fortune in interest.
You aren’t alone, and we’ve helped thousands in the same position. Many people don’t realise that there are ways to consolidate your debt without an expensive loan.
Read on to learn how Cleanslate could help you consolidate your monthly repayments without adding more debt on top of what you already have. Each solution Cleanslate offers is a formal debt solution set by the Scottish Government.
Debt Arrangement Scheme
The first debt solution we offer which consolidates debt, even with poor credit scores, is called the Debt Arrangement Scheme.
In the Debt Arrangement Scheme (usually called “DAS” for short), your assets are protected, and all unsecured debts as well as any mortgage arrears (if you choose) are consolidated into single monthly repayments. Interest and charges are frozen on debt you owe and are written off when you successfully complete the solution. Unlike some other debt solutions, in the Debt Arrangement Scheme you pay the full amount of debt you owe.
We will act as your Continuing Money Adviser and will be with you throughout the entire DAS, helping you:
- Analyse your finances.
- Figure out how much you can reasonably afford to repay towards your debt each month.
- Work with your creditors to find a fair and reasonable repayment plan.
- Set up a single monthly repayment, which is then distributed among your creditors.
- Arrange with creditors to amend the terms of your solution should your circumstances change.
A downside to DAS is that it will be noted on your credit file for 6 years. As such, it will likely affect your credit score negatively, making it hard to get new credit for the next few years. However, by reducing the amount you were previously paying out to multiple creditors down to one single, affordable, monthly payment, your day-to-day finances will be improved. This makes it less likely that you will need to rely on credit in the way you may previously have done.
Protected Trust Deed
The second debt solution we offer which consolidates debt, even with bad credit, is called a Protected Trust Deed.
In a Protected Trust Deed you pay as much as you can towards your unsecured debts for a period of 4 years and, once the trust deed is successful completed, any remaining debt is written off. Unless your circumstances change for the better such that you can actually repay the debts in full during the trust deed, any interest and charges on your existing debts will be frozen and written off at the end of the solution.
As it is a formal debt solution, there are no credit checks or requirements to enter a trust deed. However, entering one will affect your credit score, be noted on your credit file for 6 years, and you will be unlikely to get any additional credit throughout it. If you have any debts with your bank, you will likely need to change your current account to a different bank.
If you are in debt and considering a debt solution, our dedicated team of expert money advisors are on hand to help. Check if you qualify or call now on 0141 648 4320 for a no-obligation, confidential consultation.