Most of us will wonder whether consolidation of debts in the debts consolidation process is as important to make the entire debt settlement process named after it. Considered just a preliminary processing of debts, borrowers do not regard the consolidation process important. The following case however, will reveal the significance of the process of consolidation of debts.

Mr. Blake has entrusted the task of debt settlement to one of the best loan providers in the UK. Being equipped with a debt consolidation loan at the lowest rate of interest, he expects to successfully lead the debts to settlement. Things however, worsen when a debt crops up unawares. Either he considered the debt too trivial for being considered or it just slipped his mind. Now, the entire debt plan has gone kaput, with no knowledge how to deal with the new entrant. A new debt plan needs to be designed again if the new debt needs to be included.

All these could have been safely precluded had a proper cognisance of all debts and their clustering had been performed. The problems that can emerge as a result of not following the process advise that it be surely performed. Consolidation process is more of a reality check. The enormity of the debt problem can be recognised better after the debts have been totalled up. The debt consolidation loan size will also depend on the total amount of debts.

This does not in any way reduce the importance of the other processes involved in debt settlement. The stage of debt consolidation prepares the groundwork on which the entire process of debt settlement is based. Debt consolidation loans require the borrower to part with the process once the debts have been listed. Therefore, a few minutes of reconciling with the debts will not be as troublesome for borrowers. Yes, it is just a few minutes that will be needed to complete the task of debt consolidation.

After the debts have been consolidated, the part of the debt consolidation loan provider commences. The loan provider deals with debts in the following manner:

· The creditor is paid a one and final payment in lieu of the amount due on the borrower.

· The creditor is requested to lower the rate of interest or freeze the rate of interest.

Most creditors are repaid through the latter method. Lenders of unsecured loans, for instance are requested to lower the rate of interest. Where a loan has been secured against an asset, not much can be done because the creditor will instantly repossess the asset to recover his dues. This method however, helps in saving a lot on the interest cost and thus on the actual repayment cost.

Debt consolidation loans help to remove the immediate repayment burden from the borrower. Since the term of repayment in case of debt consolidation loans is large, a borrower is able to prepare for the repayment beforehand. Varied repayment methods are available with lenders to ease the repayment process. The most often used method of repayment is through monthly repayments spread over the term of repayment. This method is recommended because with time the repayable amount goes on decreasing and the monthly instalments are lesser.

The participation of the loan provider in the debt consolidation process is a distinct feature that is available only on debt consolidation loans. Home equity loans and credit cards that too are used for debt settlement, however do not offer this facility. The purview of operations of the lender in this case ends once the amount is sanctioned. This is the reason why more people prefer debt consolidation loans particularly for the purpose of debt settlement.