Debt Consolidation with Bad Credit

Debt Consolidation is possible even if you have a history of bad credit. By consolidating your Personal Loans, Credit and Store Cards, Utilities Bills and Personal Debts you should be able to reduce your debt repayments and Save Thousands of Dollars in Interest Payments.

If you make some enquiries you will quickly realize that Unsecured Personal Loans are not available in Australia to people with a history of Bad Credit. Some Pay Day Lenders advertise loans up to $3,000 no matter what your credit history is. However as these are short-term loans you will quickly see that the interest rates on these are up to 5% per month or up to 60% p.a. Therefore consolidating through such loans will not save you money.

Your only options are a Secured Loan, a Debt Agreement or Bankruptcy.

The most common secured loans can either be secured by your home, or your car. In either case you must have sufficient equity in these assets to enable them to be used for security. For example, if your car is worth $20,000 and you have a car loan of $18,000 – there is insufficient equity in your car to obtain secured finance.

Debt Agreements, are regulated by Government Legislation. They allow individuals with bad credit to come to some arrangement with their creditors under which, creditors will be prepared to accept a reduced amount in full payment of the debt.

If you have previously been declared a bankrupt or had arranged a debt agreement within the past 10 years – you will not qualify for a debt agreement.

Due to the damage that declaring bankruptcy causes to your credit history, Bankruptcy should always be your last choice. You can become bankrupt voluntarily or you can become bankrupt on the actions of a creditor. If you have considered the alternatives and have decided that voluntary bankruptcy is your best option you will need to complete a Debtor's Petition and Statement of Affairs. This may be done by contacting either a registered trustee, or the Insolvency & Trustee Service Australia (ITSA), in your local area.
 

top of the page