Should I consolidate my debts?

Q I have several credit cards and a loan, totalling ?15,000 debt. I wonder which would be the best course of action to take to make just one affordable payment each month? I am only earning ?6,000 a year at this time. Several companies have offered help, but they are all for secured loans. I am currently shelling out ?332 a month and there's no end date in sight.

BG

A One immediate option would be to transfer your credit card debt to a new card provider with a six month introductory interest rate of 0%. Among those who offer this deal at present are: Nationwide building society, Virgin Money, Egg, Morgan Stanley, Marbles and RBS Advanta. This will give you a payment holiday but be careful not to rack up extra new debt if you are granted a card. It may be, however, that your income is too low to persuade these credit card companies to give you a new card.

Next you need to talk to a debt counsellor - either at the National Debtline or at your local Citizens Advice Bureau (CAB). They will sit down with you and work out what bills are absolutely essential to pay - for example, heat, light and food. You don't say if you own your own home but it is important to speak to your lender as soon as you think you might fall into arrears. Lenders are much more understanding if you highlight a potential problem before it happens, rather than burying your head in the sand.

Your CAB will help you prioritise your payments and talk to organisations you owe money to in order to renegotiate the rate at which you pay back your debt. Be careful of companies offering to consolidate your loans - they are often much more expensive in the long run. High street banks and building societies tend to be much more competitive and don't have the hidden costs that loan companies do.

Contact National Debtline or National Association of Citizens Advice Bureaux