Falling into a lot of debt is easy, and has happened to the best of us. With many credit providers offering you loans, and credit at the click of a button, before you know it you’re in too deep. It’s easy to beat yourself up over making financial mistakes, and you are not the only one who has. But it also doesn’t mean that you’ll have to stay in this financial situation forever, there are solutions.

However, if you choose to ignore it, there are consequences. Which may include a bad credit history, resulting in a decline of a home loan, cell phone contracts, and exorbitant interest rates.

So how can you solve your financial problems and become debt free? There are many ways of taking care of your financial burdens, a change in lifestyle, living a life that you can afford or, seeking help for the financial stress that you are in.

For some, these resolutions are just unrealistic, and takes a lot of diligence. So what is your next solution? Debt review and debt consolidation can help you live a stress-free life, but what is the difference? And how do you know which one will better work for you?

Debt review, also known as debt counselling, is a process where debt counsellors assess the debt that a consumer is in, and renegotiates interest rates with credit providers to reduce them. Being under debt review also extends your debt repayment terms.

Debt consolidation is when a consumer takes out a new loan that consolidates all the debt a person owes into one reduced payment.

So how do you decide which option to go for? Below is an honest and direct comparison:

Debt Review:

• Anyone can qualify
• You pay a single instalment monthly
• Customised to suit your budget
• Affordability is calculated individually
• Addresses all types of debt
• Debts are lowered to offer an affordable solution
• Protection against legal action
• Assets are protected while repaying debt
• Credit record cleared and restored

Debt Consolidation:

• Requires a good credit record to qualify
• You pay a single instalment monthly
• The interest rate applied is lower
• Pay off your debt faster
• Avoid credit damage
• Borrow money from yourself instead of someone else
• There is no deadline to pay back the loan

So which is right for you?

What you need to remember is that each option has its pros and cons, as each person’s financial situation is different. Taking up Debt Review or Debt Consolidation takes diligence, and becomes your money makeover. This means changing your habits, committing to a budget, sticking to it, and living off less.

Whichever option you decide on, it is vitally important to research the organisation before signing up for any repayment plan.