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Consolidate debt to solve your debt problems

By Administrator 12 July, 2013

No matter how careful you are, sometimes the financial pressure and stress of dealing with debt problems can cloud your decision making process. Some people try to ignore their problems in the hope that they will go away and others make rushed decisions without thorough research.

Solving a debt problem takes careful planning and depending on the level of your debts you may need professional assistance.  We will try and explain some of the options which may be available to you, but if you need professional assistance it is best that you call us direct on 1800 676 598.  We offer a free debt assessment.

Debt Consolidation

You may have heard of the term debt consolidation. This is where you roll all of your debts into a single loan (also known as personal loans).

If you are employed and have a good cash flow a debt consolidation loan may be the best way to manage your debts.  The loan will allow you to bundle your debts into one account. The new loan will have a set time period (usually between 3 and 5 years). This is a better way to manage debts for the following reasons:

  • You only have one monthly payment (rather than having to make multiple payments on different days, i.e. it avoids the risk of forgetting to make repayments);
  • You have a set period of time to repay the loan (so there is an end date when you will become debt free); and
  • It will have a set interest rate (whereas your other debts may attract different rates of interest).

To be eligible for a debt consolidation loan, you will also need a good credit history. If you have a poor credit history, your loan is likely to be rejected.

If you are successful in obtaining a debt consolidation loan, make sure that you close the other accounts.  Failing to close your other accounts (which you just paid out with the loan) could end in financial disaster.

Debt Consolidation alternatives

If your application for a debt consolidation loan is declined you may need to consider some alternatives.

Your options will depend on the seriousness of the defaults recorded on your credit file or the level of your debts.  If you are struggling to pay the minimum repayments each month, then you are more than likely insolvent. Being insolvent will reduce your options to the following debt solutions:

To understand the differences between these solutions, we have prepared a comparison table.

If you need advice on solving debts, give our highly trained consultants  a call on 1800 676 598.