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Debt Consolidation

Debt consolidation reduces the number of creditors by merging all the debt into a single loan. This does allow a single monthly payment to be introduced but unless the interest rate can be reduced and the period of the loan lengthened there is little other benefit. Also there is always the temptation for the client to go and start borrowing and spending again as this is not controlled and this just results in an even worse debt exposure situation developing.

What is debt consolidation?

  • Debt consolidation is basically amalgamating all a client’s debt into a single loan with a single monthly repayment amount being calculated. While debt counselling works to prevent a re-occurrence of the debt dilemma the debt consolidation structure allows the client to continue spending and borrowing thereby possibly worsening the situation.

  • Debt consolidation may reduce monthly repayments dependent upon what interest rate and period of the consolidated loan is negotiated and agreed to.

Advantages of debt consolidation

  • Consolidation of all existing debt into a new loan with a single monthly repayment amount. 

  • Possible reduction of interest rate and lengthening of loan period. Normally done via an existing Bond

Disadvantages of debt consolidation

  • No additional legal protection from creditor

  • Allows debtor to continue to spend and borrow thereby possibly aggravating their financial situation. This is especially so if there is an perceived or real improvement in monthly cash flow as a result of an reduced interest rate and a lengthened loan period. Temptation always will win out!

Administration of debt consolidation

When clients decide to approach Administrators for assistance the Courts are approached for an Order to allow the administrator to take over the financial life of the client. It has been our experience that once under administration the client seems locked in to the administrator who may or may not be paying the creditors. It appears that few statements as to what the status of the matter is are issued regularly and which creditors are being paid what amount, when and what the balances are. We have come across cases where the clients have been under administration for many years and have never received any communication as to the status and balances of the debt.

It is recommended that clients take advice before going into administration. Should any client be unhappy with their administrator Killaghy Debt Counsellors would be happy to investigate and arrange for the termination of the Administration Order.


Killaghy Business Solutions are Registered Debt Counsellors


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Apply for Assistance:

The first step to get started is to complete our application form. Download the form below, complete it and mail it back to us.