A recent survey has revealed that as many as 1 in 7 adults in the UK has turned
to debt consolidation in the past three years, in an attempt to try and bring
their borrowing and debt under control. Millions of people nation-wide have
taken out unsecured loans or re-mortgaged their homes in an attempt to place all
their debts in one place, with Scots borrowing an average of £14,500 - among the
highest in the UK.

The survey, which spoke to more than 2500 adults
across the country, showed that 36 per cent of those arranging consolidation
loans took out an unsecured personal loan, while 15 per cent transferred their
debt to a zero-rate credit card. However, 18 per cent opted to add the cost of
the debt onto the cost of their home loan by re-mortgaging. Furthermore, the
research suggests that up to 360,000 people - around 6 per cent of consolidators
- took out a loan in excess of £50,000.

The research provides a glimpse
into the UK’s ever-increasing problem with debt. But, while debt consolidation
is a good and entirely sensible way to get your finances under control -
especially if your debts are with various lenders and at various interest rates
- consolidating your debts should be seen as a ‘wake up’ call towards getting
your finances under control.

Debt consolidation involves arranging a
single loan to cover all the debts you currently owe - regardless of whether the
debt is to your bank, a credit card company or even a debt collection agency,
such as Capquest. Recent
times have shown that most people believe consolidation is a way to continue
borrowing, as it has become far too easy for people to consolidate their
borrowing into a single loan and continue to borrow. Unfortunately, this
strategy often leads to people falling even deeper into debt than they had been
previously.

Some financial experts warn that debt consolidation should
only be viewed as a last resort, especially if you find your back is really
against the wall. They suggest that the threat of serious legal proceedings or
the potential loss of the family home should be the only instances where debt
consolidation should be considered.

Advertisements on television and in
newspapers, all offering easy solutions to escaping the debt trap, might seem
tempting to those in financial difficulties. However, debt consolidation only
works if you are prepared to curb your spending and work at getting your
finances back on track. Debt consolidation may be seen as a quick fix, or an
easy solution to debt problems but statistics are now showing that this isn’t
the case.