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5 Myths About Debt Consolidation Loans in the UK

Written by Alex Swindells on . Posted in Uncategorized.

Updated for 2026

Debt consolidation is when you combine several debts into a single loan. You take out one new loan to pay off all your existing debts, leaving you with just one monthly payment to manage. If the interest rate on the new loan is lower than what you were paying before, your monthly payments could drop too.

If you are unsure whether a debt consolidation loan is the right debt solution for your situation, read on. We have broken down five of the most common myths so you can make a more informed decision.

1. Debt consolidation ruins your credit score

wallet with credit cards inside

When you first apply for a consolidation loan, your credit score may dip slightly. This is normal and usually temporary. The lender will run a hard credit check, which leaves a mark on your file for around 12 months.

The good news is that if you keep up with your new monthly payments on time, your score should start to recover. Staying on the electoral register, keeping old credit accounts open (even with zero balances), and avoiding new applications for a while all help to rebuild your rating.

Over the longer term, consolidating debt can actually improve your credit score because you are demonstrating that you can manage a single, structured repayment plan. So while there is a short-term impact, it should not stop you from getting a mortgage or other credit down the line.

2. You always pay back less with a consolidation loan

five and twenty pound notes

This is not guaranteed. A consolidation loan can reduce your monthly outgoings, but the total amount you repay depends on the interest rate and the length of the loan term.

For example, spreading your repayments over a longer period might lower your monthly bill, but you could end up paying more in interest overall. Before signing anything, compare the total cost of your current debts (including interest) against the total cost of the new loan.

If your credit score is low, you may only qualify for a higher interest rate, which could mean paying back more than you would have done sticking with your original arrangements. Always do the maths first.

3. Consolidation just creates more debt

man calculating debt on calculator

A consolidation loan does not add to your debt. It restructures what you already owe into a single, more manageable payment. The total amount of debt stays the same (or could even decrease if you secure a lower rate).

The risk of “more debt” comes from behaviour after consolidating. If you clear your credit cards with the new loan and then start spending on those cards again, you will end up worse off. The key is to treat consolidation as a fresh start: close or freeze the old accounts and focus on the single repayment.

Some people genuinely find that having just one payment each month, rather than juggling four or five creditors, makes budgeting far easier. That simplicity can be worth a slightly higher total cost if it keeps you on track.

4. You will always save on interest

interest rates on phone and laptop

The interest rate you are offered depends almost entirely on your credit history. Lenders assess your credit report, income and existing commitments before setting a rate.

If you have a strong credit score, you may well secure a competitive rate that saves you money. But if you have missed payments or have a patchy credit history, the rate offered could be higher than what you are already paying on some of your existing debts.

This is why comparing the APR on a consolidation loan against the rates on your current credit cards, overdrafts or other loans is so important. Do not assume consolidation equals cheaper, because it depends on your individual circumstances.

5. Debt consolidation is a scam

police van parked on street in the UK

Debt consolidation itself is a perfectly legitimate way of managing multiple debts. Banks, building societies and regulated lenders all offer consolidation products.

What you do need to watch out for is unsolicited contact. If a company approaches you out of the blue offering to “fix” your debt problems, that is a red flag. Reputable lenders do not cold-call or send random texts. Always check that any company you deal with is authorised by the Financial Conduct Authority (FCA) before sharing personal or financial details.

If you want to explore consolidation, use well-known comparison websites or speak to your own bank first. You can also get free, impartial advice from services like StepChange or Citizens Advice.

Benefits of a debt consolidation loan

  • All of your debts are combined into one place, making them easier to track.
  • Once your original creditors are paid off in full, you will no longer face chasing letters or threats of legal action from them.
  • You make a single monthly payment, which can simplify your budgeting considerably.
  • If you secure a lower interest rate, your overall repayment cost could drop.
  • Successfully repaying a consolidation loan on time can help rebuild your credit score over time.

Is a consolidation loan right for you?

A consolidation loan works best when you can secure a lower interest rate than you are currently paying, and when you are disciplined enough to avoid taking on new credit while repaying it. If your debts are relatively small or you are struggling to meet even minimum payments, other options like a Debt Management Plan, a Debt Relief Order, or an IVA might be more suitable.

If you have been declined for a consolidation loan, or you are finding it hard to keep up with multiple creditors, get in touch with Swift Debt Help. We can talk you through the alternatives and help you find a debt solution that fits your circumstances.

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Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

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What To Do If You Can’t Afford Your Payday Loan

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, Uncategorized.

Updated for 2026

A payday loan is a short-term borrowing option, usually for a small amount, designed to tide you over until your next payday. Because payday lenders often accept applicants with poor credit histories, the interest rates tend to be significantly higher than other forms of borrowing. If you can’t afford your payday loan repayments, the debt can quickly spiral due to these high interest charges.

Before approving your application, the lender should carry out affordability checks, looking at your income and outgoings. However, they are not in a position to advise you on whether a payday loan is the right option for your circumstances. That is where independent debt advice comes in.

Steps to Take If You Can’t Afford Your Payday Loan

If you have already borrowed from a payday lender and are struggling to keep up with repayments, here are some practical steps to consider:

Contact your lender as soon as possible. Explain your situation honestly. Under FCA regulations, your lender is required to treat you fairly and point you towards free, independent debt advice. They may agree to freeze interest temporarily or accept reduced payments while you get back on your feet.

Consider cancelling your continuous payment authority (CPA). If you are certain you cannot make a payment, you have the right to cancel your CPA or direct debit. Speak to your lender first to understand any implications, then contact your bank to revoke the authority. Since 2014, the FCA has limited lenders to two failed CPA attempts, giving you more control over your account.

Keep a written record of everything. Save emails, note down phone conversations, and keep copies of any letters. A clear paper trail protects you if there is ever a dispute about what was agreed.

Do not roll over your loan. If your lender offers to extend or roll over your payday loan to the following month, think carefully before accepting. Rolling over adds extra fees and interest, making the total amount you owe even larger. The FCA has capped the total cost of a payday loan at 100% of the original amount borrowed, but rolling over still increases your debt unnecessarily.

Falling behind on a payday loan can also affect your credit score, so it is worth acting quickly to limit the damage.

Debt Solutions for Payday Loan Debt

If your financial difficulties are more than a short-term problem, there are formal and informal debt solutions available in England, Wales and Northern Ireland. Each one works differently, so it is important to understand how they could apply to your situation. The information below is for general guidance only and should not be treated as financial advice.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement between you and your creditors, arranged through a licensed Insolvency Practitioner (IP). It allows you to repay a proportion of your debts over a set period, typically five to six years, based on what you can realistically afford.

Your IP will review your income and essential outgoings to work out a monthly payment that leaves you enough for rent or mortgage, household bills, food and other necessities. If your creditors accept the proposal, you make one affordable monthly payment for the duration of the arrangement. At the end, any remaining qualifying debt is written off.

Payday loans are classed as unsecured debt, so they can generally be included in an IVA alongside other debts such as credit cards, store cards and personal loans.

Debt Relief Order (DRO)

A Debt Relief Order may be suitable if you have relatively low debts and limited assets. A DRO lasts for twelve months, during which your creditors cannot chase you for payment or take legal action against you. If your financial situation has not improved by the end of that period, the debts covered by the order are written off entirely.

To qualify for a DRO in 2026, you must meet several conditions. Your total qualifying debts must not exceed £50,000. Your surplus monthly income, after essential spending, must be no more than £75. You must not own a vehicle worth more than £2,000 or have savings and assets above £2,000. You also need to have lived or carried on business in England, Wales or Northern Ireland. The application fee is £90, paid upfront.

Debt Management Plan (DMP)

A Debt Management Plan is an informal arrangement where a third-party provider negotiates with your creditors on your behalf. You make a single monthly payment to the DMP provider, who then distributes it among your creditors.

Because a DMP is informal rather than legally binding, it offers flexibility: you can adjust payments if your circumstances change. However, your creditors are not obliged to stick with the arrangement and could still take further action if they choose to. A DMP is particularly suited to non-priority debts like credit cards, store cards and unsecured loans, including payday loans.

If you are worried about how debt is affecting your wellbeing, you are not alone. Many people find that financial pressure takes a toll on their mental health, and seeking support early can make a real difference.

Bankruptcy

If other options are not suitable, bankruptcy provides a way to clear your debts and make a fresh start. You can apply online through the Insolvency Service, and the application fee is £680.

Once you are declared bankrupt, creditors can no longer pursue you for the debts included. However, any non-essential assets you own may be sold to repay what you owe. Bankruptcy typically lasts twelve months, after which you are discharged from most of your debts. It will remain on your credit file for six years from the date of the order.

Bankruptcy carries certain restrictions during the twelve-month period, and it becomes a matter of public record. For these reasons, it is generally considered a last resort after exploring the alternatives. You can read more in our guide to things to know before declaring bankruptcy.

Get Free Payday Loan Debt Help

If you can’t afford your payday loan and want to explore your options, get in touch for a free, no-obligation assessment. We can help you understand which debt solution might be right for your circumstances.

The information on this page is for general guidance only and does not constitute financial advice. Everyone’s situation is different, so we recommend speaking to a qualified professional before making any decisions about your finances.

Ready to Find Out if You Qualify for Help?

Use our Solution Finder for a free, no-obligation assessment. Our team can help you understand your options and take the first step towards a debt-free future.

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Improve Your Health – Kick Debt To The Curb

Written by on . Posted in Uncategorized.

Updated March 2026 — The link between debt and health is well documented, yet many people still underestimate how financial pressure can affect their body and mind. According to The Money Charity, millions of UK households continue to carry problem debt, and the resulting stress takes a very real toll on physical and mental wellbeing.

We all worry about money from time to time, but sustained worry about debt can make everyday tasks feel difficult and laborious. Even going to work can feel like a real strain when you are worried sick about what you owe.

How Debt Affects Your Health

We’ve listed below some of the less obvious debt related ailments which studies have shown have a high correlation with being in debt. Research from the Money and Mental Health Policy Institute confirms that people in problem debt are three times more likely to experience a mental health problem. If you suffer from any of these, it would be worthwhile using our online debt solution finder to see whether we can help you reduce your debt levels. You may find that we can help you write off up to 90% of your debt.

Do you suffer from any of these?

  • High blood pressure? – Worrying about how you are going to make the next payment? How to ask your family or friends for money? The phone ringing? The postman calling? Bailiffs? All of these can cause high blood pressure, which in turn can lead to more serious complications such as strokes and heart disease.
  • Feeling anxious? – Anxiety can be brought on by the stress caused by being in debt and often goes hand in hand with high blood pressure. All of the worries that can cause high blood pressure can also result in anxiety. The NHS recommends speaking to your GP if anxiety is affecting your daily life.
  • Aching muscles? – Waiting for that next credit card bill or ‘red’ letter to drop through the letterbox? Believe it or not, studies have shown that being in debt can also cause muscle aches and strains as well as migraines. People with higher levels of debt stress are also more susceptible to ulcers, back pain and muscle tension.
  • Depressed? – It’s no surprise that debt can leave you feeling depressed. The kids need new shoes, you’re desperate for a holiday, your energy bill is growing instead of shrinking regardless of how little you use the heating… the list goes on. Not being in control of your financial future can leave you feeling, well frankly, depressed.
  • Catch every cold going? – The last thing you need when your head is full of debt is having it full of cold as well, but being in debt can also have a negative impact on your immune system, leaving you more susceptible to coughs and colds that you’d usually fight off. Chronic stress and staying awake at night worrying about debt can both substantially lower your immunity to infections.
  • Always arguing? – When you are stressed and worried, it can be hard to have a rational conversation with your partner. Poor communication within a relationship can often lead to its demise. Arguing about the debt and consequences won’t help at all.

Where to Get Help With Debt

If debt is affecting your health, taking the first step towards getting help can make a significant difference. There are several free, confidential services available in the UK:

You might also want to explore whether an Individual Voluntary Arrangement (IVA) could work for you, or learn about the different types of loans and how they contribute to your overall debt picture.

If you can relate to any of the ailments above and believe that debt is having a detrimental effect on your health, give Swift Debt Help a call on 0800 211 8790 or complete our simple debt solution finder and we could help you become debt free. We’ve helped hundreds of people just like you (read our customer reviews) so what are you waiting for?

This article is for general information only and does not constitute financial advice. If you are struggling with debt, please seek guidance from a qualified debt adviser or one of the free services listed above.

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