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Debt Consolidation made easy

Debt Consolidation

Debt Consolidation can save you thousands of dollars and stop worry and stress!

There really is no need to delay. Simply click here to see if you qualify for one of our debt reduction programmes

If you are looking to consolidate your debts it can seem a fairly daunting task. You may have heard about Debt Agreements, Debt Management, Bankruptcy and Mortgage refinancing but  might not know which one is best for you. All of them can provided debt relief. However, picking the right one is vital in achieving your goal of becoming debt free.

In what ways can I consolidate my debts?

Debt consolidation commonly takes three forms each of which is outlined in more detail below.

Please note that you can find out more by clicking on the links.

1, Consolidation through further borrowing.

In the first instance you can try to consolidate by borrowing further either in the form of an unsecured loan, refinancing your existing mortgage agreement or taking a secured loan against your property.

Mortgage refinance

Whether or not you can use your property depends on how much equity you currently have in it. For example; if your house is valued at $200,000 and only have a $150,000 mortgage in theory you will have $50,000 worth of equity. However, many mortgage providers will only offer an 85% loan to value ratio therefore reducing the amount of equity you can release. It is also worthy of note that if you are refinancing your mortgage you will have to pay a brokers  fee which will further reduce the amount of funds available to consolidate your debts.

Secured and Unsecured loans

If you decide to consolidate debt through a secured or unsecured loan always make sure you are fully aware of how much interest you are going to be paying. If you have struggled with debt problems in the past you may have to use a lender who will consider you a high risk, therefore increasing the amount of interest typically charged.

2, Informal Arrangements (Debt Management)

The second form of debt consolidation is to try to negotiate an informal repayment plan with your creditors (click here to see our blog on the subject). If you owe under $10,000 this may be a viable option for you. However, if you decide this is the approach you are going to take be aware your creditors are under no obligation to accept your offers and if you are not repaying your agreed amounts each month you may be open to further legal action.

If you can’t get arrangements in place you also run the risk of your debts increasing as a result of continued interest and penalty charges incurred. Debt consolidation in this form is therefore best suited for smaller amounts and requires a great deal of resolve and patience in order to achieve a positive result.

3, Debt Agreements and Bankruptcy

The third form of consolidation is more formal and is actually regulated by the Australian Government. If you are insolvent (unable to repay your creditors when they fall due) you may wish to consider bankruptcy or enter into a Debt Agreement.

Debt Agreements

A Debt Agreement is a form of consolidation whereby you repay an affordable payment each week or fortnightly for a period between 3 and 4 years. At the end of this time any debt you have outstanding is written off and you are free to get on with your life. Debt Agreements will effect you ability to obtain further credit in the future (click here to see our Debt Agreement FAQ). A Debt Agreement is by no means an easy option to take and if you have been living beyond your means for sometime you may find it hard to adjust to living on a smaller budget. However, as a form of consolidation Debt Agreements are a great way of avoiding bankruptcy and avoid any of the restrictions declaring bankruptcy can incur.

Bankruptcy

Bankruptcy is a recognised form of dealing with debt  (click here to find out more) and thousands of Australians declare bankruptcy each year in order bring about debt relief. Bankruptcy does cost and you will be subject to restrictions both personally and financially for a number of years (click here for bankruptcy FAQ). However, as a form of debt consolidation bankruptcy can go a long way to helping you get your life back on track.

Overview

One of the key aspects of successful debt consolidation is the need to be disciplined. Many people consolidate their debts and proceed to then spend again on their cards. The result in many instances is that people end up owing a massive consolidation loan as well as a significant amount of debt incurred after they have consolidated.

The result is a never ending spiral of debt that can cause even more stress and worry. The key therefore to this kind of consolidation is to NOT use other credit facilities until such time you have paid off your loan.

If you are interested in finding out more simply click on the link below and we will contact you when you specify.

 
Rounded Rectangular Callout: Further borrowing Key points: 1, Always make sure you know exactly what you are paying in fees. 2, Think long term. How much interest are you going to pay and for how long will you be paying? 3, Are your payments actually being reduced? 4, Don’t be hassled into making a quick decision. Take your time and ask as many questions as you want! 5, Don’t be tempted to spend again. You will simply be making your situation even worse. Rounded Rectangular Callout: Informal Payment Plans Key points: 1, How long are you going to be paying back your debts? It is a realistic length of time? 2, Don’t give in to creditors, pay them all fairly. 3, Do not spend anymore on credit, this will not help your situation. 4, How much interest are you paying? Is it more than what you are paying each month? Rounded Rectangular Callout: DA’s and Bankruptcy Key points: 1, Can you avoid bankruptcy through pursuing other avenues of consolidation? 2, How will the restrictions of bankruptcy effect you? 3, Don’t sign up to something you can’t afford. You will just be making things worse for yourself. 4, Don’t be afraid to ask as many questions as you feel necessary in order to be sure you are doing the correct thing. Rounded Rectangular Callout:

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