Having credit card debts and other commercial debt could get stressful if you have no means of paying them off. Besides, the interest rates could gobble up or destroy your bank balance without proper income.
That is where a debt consolidation loan comes in. It saves you from the burden of high-interest rates by combing all your debts into one repayment option. Therefore, making it the only option to safeguard your money and step away from declaring bankruptcy.
In fact, it might get impossible for you to manage your repayments without consolidation. Read on to know more.
What are the types of debt consolidation?
Choose consolidation options before you corrupt your bank account and credit score by declaring bankruptcy. Listed below are the strategies for debt consolidation:
- Credit card balance transfer
- Home refinancing
- Home equity loan
- Debt management plan (DMP)
Either of these steps could help you eliminate debts from your financial history. At the same time, you get to access the benefits of this strategic approach. For example, you could turn all your debts into one and lower your interest rates.
You could even improve your credit score and pay off your debt faster. However, there might be instances where you cannot rely on such a constructive approach.
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When to declare bankruptcy?
If you are looking for a fresh financial start, then bankruptcy should be your option. In case your consolidation plan fails, you can declare it. Moreover, it is only a better option if finances are unavailable.
So, what does it do? Ideally, it eliminates all your debts and gives you a clean slate. It gets rid of unsecured debts while halting wage garnishments and foreclosures. However, your credit score is a massive blow, and your credit history is stained.
In Australia, you need a regular income source and a spending plan to safeguard certain valued assets. The entire process takes a long time to complete, and you can eventually walk away without a debt successfully.
So, only declare bankruptcy if all consolidation options have failed you.
How do you choose debt consolidation companies?
To ensure that you achieve the best results from debt consolidation, you should hire a company specialising in such assistance.
Ideally, numerous agencies in Australia help you do that. However, choosing a realistic company that advertises the right kind of help is crucial. So, how do you know who to trust?
To ensure you’re choosing the right one, look out for the one who:
- Are affiliated with the Australian Finance Compliance Authority (AFCA)
- Asks you to sign legal documents
- Helps you with all your questions and discusses repayment options
- do not rush the transactions
Apart from these, you should always trust businesses featuring a credit counselling portal for clients. Besides, such a debt management company should assist you in paying less while protecting all your assets.
Safeguarding money is something every Australian should know about. Before you decide to declare bankruptcy, you should look at every consolidation avenue in the country.
You could choose a debt consolidation loan or credit card balance transfer based on your requirement. However, remember to analyse the company and ensure its authenticity and affiliation with the AFCA. It will help you choose a licensed provider determined to assist you with your financial woes.
Hence, these benefits make consolidation the only way to safeguard your money.