Debt Consolidation Loans vs Debt Relief Solutions: What’s My Best Option?

Debt Consolidation Loans vs Debt Relief Solutions: What’s My Best Option?


Escaping debt is never easy, so entering a debt relief or debt management plan may seem like your best option.

However, you shouldn’t assume this is a consequence-free solution to debt. Debt management plans have many pitfalls to avoid and conditions to be satisfied, which can often be as stressful as debt itself.

At NHS Credit Union we have developed our loan products with this in mind and can provide debt consolidation loans with fair and transparent terms and conditions to help you manage what you owe, alleviate your debt worries, and get back to a more financially stable position.

In this blog we explore some of the pitfalls of debt relief and debt management solutions and why a debt consolidation loan from NHS Credit Union could be the better option for NHS staff and their families.


Understanding Debt Relief Solutions

Debt relief refers to any agreement or plan that allows you to write off or repay some or most of your debt. These are sometimes referred to as debt management solutions, as they allow you to settle overwhelming debts in a manner that is manageable for you.

In Scotland, debt relief options are varied and can include a Protected Trust Deed (PTD), Debt Arrangement Scheme (DAS), Debt Management Plan (DMP), Sequestration or Minimal Asset Process Bankruptcy (MAP).

In England, debt relief options are varied and can include an Individual Voluntary Arrangement (IVA), Debt relief order and Bankruptcy.

While there can be advantages to each option depending on your circumstances, often these solutions carry long-term consequences for your finances and are detrimental to your ability to pursue credit or savings in the future.

This has become particularly relevant to younger people in debt. Many are looking for a quick, pain-free solution and are drawn into debt relief plans through clever marketing without understanding the full extent of what they are agreeing to or the potential risks.

Some of the pitfalls of debt management solutions include:

  • Eligibility often requires that you have a large amount of unsecured debt, and many plans exclude some kinds of debt such as court fines and student loans.
  • Debt relief plans lock you into long repayment terms (upwards of 4 years) and it’s even possible to enter plans with terms of 20+ years.
  • Entering plans will have an immediate, negative effect on your credit rating.
  • No debt is written off completely and under some schemes like a DAS and you must pay back the full amount you owe.
  • Normally, you cannot pursue further credit while on a debt relief or debt management plan.
  • Your assets are not always protected, and you may be required to sell your home or car.
  • If your circumstances change e.g. income increases or reduces then this will impact your repayments
  • If you receive inheritance or assets whilst in a Trust Deed within 48 months of signing, then they will form part of your estate and should be passed to your trustee for the benefit of your creditors.
  • It can affect your job depending on the role and the debt solution you enter into.
  • You cannot continue to become a director of a limited company or hold office with certain councils.
  • If you miss any repayments, your creditors can pursue other actions such as declaring you bankrupt.
  • Many debt relief plans include expenses and fees as part of your monthly repayments, so not all your payment will go to your creditors (At NHSCU we feel this fact is not mentioned enough).


An important first step before making a decision is to do your research and assess your options in detail.

If you’re looking for further guidance, we’ve included helpful links to trusted debt advice resources at the end of this article.

You should always be aware of the long-term impact on your financial status before pursuing a debt relief solution, as some will have more detrimental implications than others.

A better option for NHS staff and their families can be to take out a debt consolidation loan through the NHS Credit Union.


Debt Consolidation through NHS Credit Union

Members of our credit union have access to a range of loan products with fair terms that can help you pay off your debts, such as our debt consolidation loan.

Some of the key differences between most debt relief solutions and NHS Credit Union debt consolidation loans are:

  • NHSCU loans are managed by our staff in a sympathetic, non-judgemental, and helpful manner.
  • NHSCU loans are confidential between you and the credit union, whereas your PTD, DAS, or bankruptcy status is made public record and can affect employment eligibility.
  • NHSCU loans will not affect your pension contributions, whereas debt relief schemes can.
  • Further credit is often unavailable if you are in a debt relief plan, which can last for 5 to 6 years. However, at NHSCU if your credit worthiness has improved through regular savings and loan payments, NHSCU will offer you a review.
  • NHSCU loans have low interest rates, and you can also save money while you are paying off your loan.
  • Debt consolidation solutions and saving regularly with NHSCU can enable members to rebuild their credit history quicker.
  • NHSCU debt consolidation loans offer a range of repayment periods that are regularly reviewed and assessed to support your access to future credit.


Your choice will ultimately come down to what is most affordable and manageable for your specific circumstances. As a member of NHS Credit Union, you can speak to one of our member service officers at any time.

Please get in touch to discuss your debt repayment options and loan eligibility.


About the NHS Credit Union

The NHS Credit Union is owned by NHS staff and their families and is run solely for their benefit.

Our membership services are designed with an understanding of the challenges and specific circumstances of NHS staff, their families, and communities in mind.

We make it our priority to help and support you to find the most suitable solution to help you manage debt, with fair terms and affordable interest rates on our products.

If you are thinking of applying for a loan but not sure how much to borrow and for how long, our online loan calculator can help you see how much you may be able to borrow and what your repayments could be.


Benefits of joining NHS Credit Union

All NHS employees in Scotland or the North of England can join the NHS Credit Union as well as any family member living in the same household. And we also have a Children and Young Person Saving Account that can be opened by parents, guardians or carers.

Benefits of our loans and savings accounts include:

  • Free Life Insurance Cover for your Personal Loan up to the age of 79 (T&Cs apply)
  • Up to £85,000 in your Credit Union account is protected under the Financial Services Compensation Scheme.
  • Payroll Deduction Scheme to contribute to savings and confidential deductions for loans, which comes direct from your salary.
  • Direct Debit options also available for NHS Family members and retired NHS staff.
  • Online Member Support Hub and free financial advice for members.


Our mission is to work with our partners in the NHS to promote a growing culture of financial education and wellbeing while reducing financial stress for you and your family and providing ethical assistance to those who need it.

Your NHS. Your credit union. Your money.


To find out how much you could borrow with NHS credit union or to discuss your concerns about how to manage your debts, use our online loan calculator or download our app. If you feel you may be entitled to in-work benefits you can also check the UNISON benefits calculator.


Links for Debt Advice


Money Matters |

Citizens Advice Scotland (


Citizens Advice

Home » Money Matters (


Links for NHS Staff Benefits

Check out the resources on your NHS staff website, such as Greater Glasgow and Clyde.


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