Are you finding it hard to handle multiple debts at the same time? Without a considerable amount of savings, overcoming this situation is next to impossible. You can try to address each debt issue individually, but it will take a lot of time.

If you do not want to chase the above way, two alternatives are there. They are debt consolidation and debt management. These two ways can help you deal with the existing debt problems.

They both look forward to downsizing the burden of debts. However, they are not similar to each other. There is a basic difference in their execution.

You should implement them in distinct scenarios. How do you know that? To do so, you need to understand them in totality. Then, you will be able to spot the difference and choose a better option.

 Debt consolidationDebt management
DefinitionPaying off multiple debts together via a single loan.Approaching a third party to negotiate a better repayment plan.
Basic workingCombine the debt balances to pay them together.A debt management firm will negotiate with your debtors on your behalf.
CostThe cost may vary depending on credit scores. Get competitive rates based on affordability.The cost should vary according to the range available for a debt management.
Repayment structureLoan payments break down into small amounts.On top of the decided repayment amount, you will have to pay a fee for a debt management arrangement.
ConsiderationsSituations and consequences may vary depending on the type of debt you have.You might have to let go of loan payments for ultimate settlement which can affect your credit scores.

Debt management is about a plan or process for you to restructure the repayment. On the other hand, debt consolidation is done with the help of a loan. This means you have to borrow money for the latter.

If needed, you can explore further about these two topics with the help of this blog.

Comparing debt management and debt consolidation

To acknowledge the ways these two are different or complement each other, dive deeper. Start by understanding “how they work” and their perks and setbacks. This is how you can point out the disparities and move ahead to make the right decision.

Debt consolidation

This can be achieved with the help of a loan. This financing arrangement lets you club all your pending payment issues together. Thus, you do not have to monitor each debt separately.

With one loan, you can complete the payments. Most importantly, you do not have to face separate interest charges. Do you know that you can get debt consolidation loans for bad credit from a direct lender?

Find out how it can be possible by evaluating its pros and cons.


These are points that show how these loans are useful for you.

  • Additional savings: The interest of all the pending payouts will come together. With direct lenders, you can expect to get the most competitive rates. You can easily save some money on interest.
  • Simplified payments: You are free from the burden of managing multiple payments at the same time. These loans consolidate your debts through a single payment. You just have to focus on that.
  • No credit checks: With bad credit, you do not have to face rigorous credit assessment. The lender is keen on knowing your affordability, but credit history cannot establish it. Moreover, soft checks do not matter if you have poor credit.
  • Apply from anywhere: As loans, they do not compel you to fulfil hefty steps and paperwork. You can apply for these loans online without having to visit a bank branch.


These are the aspects that must garner some attention from your end.

  • Penalties: Repaying on time is vital or else the lender will impose late fees. Besides, the rate of interest will start accruing, and credit scores will get the worst hit.

Understand debt consolidation with an example

You have accumulated debt of principal amount of £20,000. Here, you can compare the amount of interest you have to bear in case of debt consolidation loans and other ways. If you are planning to use your credit card, the interest will be around 21%. It comes down to 11.99% if you choose consolidation of loans. Allow the repayment term to remain the same i.e. 36 months. With a credit card, you have to pay £ 600. However, with loans, you have to pay £ 500. The difference in the overall interest you will pay in both cases is £ 1802.  

Debt management

This is actually a plan which aims at relieving you from paying some portion of the debts. Here, negotiation with the debtor is critical. A third-party firm will do this in return for some fees.

Thus, you can manage to pay less amount of debt through this process. Take a tour of its pros and cons as well.


Take note of them so that you know how to make the most out of this procedure.

  • Expert suggestion: Your matter will now be handled by an expert agency. They will do whatever best is possible in this given situation. You can expect the best outcome from this.
  • Huge savings: Getting relief from a part of debt means you can make a significant amount of savings. It will be more than what you can save after obtaining personal loans with no guarantor at competitive rates.
  • Pocket-friendly payments: The debt management plan is designed to match your financial ability. You can opt for a budget-friendly payment arrangement.


Do not ignore or you might have to repent later.

  • Not all debts can be considered: This process is applicable to tackle some specific forms of debts. You cannot use them for all debts.

Understand debt management with an example

The amount of debt you hold right now is something £30,000. When you consider the debt management process, the amount payable by you would be £ 36, 498. Here, the average monthly fee stands out to be £50. The total amount you have to pay is £40, 257. Finally, the monthly payments you have to cover would be £675.90.  

The bottom line

The sharp differences between debt consolidation and debt management are now uncovered.

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