Debt Consolidation, Debt Solution, Debt Relief

If you are a home owner with some equity in your home, probably the most effective debt consolidation strategy would be to refinance your mortgage and include your other ‘more expensive’ unsecured debts into your mortgage.

Simply speaking, unsecured debts are generally far more expensive than the cost of your mortgage.  That is even the case if your credit history is not too good and you are on a higher mortgage rate.

By consolidating your credit cards, unpaid defaults, personal loans, tax debt and any other unsecured loans into your mortgage, you could save thousands of dollars each year as well as improve your credit history.

Please note that most lenders have recently dropped the refinance LVRs they are prepared to consider.  Therefore to qualify for debt consolidation through mortgage refinance yiu must have at least 20% equity left in your property even after the refinance and consolidation.

We frequently receive refinance requests from persons lookingt to consolidate their unsecured loans into a new mortgage.  That is generally not possible as new home purchasers already borrow the maximu m possisble for the purchas eof their property and it does not offer the additional securoty required for the purpose debt debt consolidation.

If you have unsecured debts (such as credit cards, personal loans, store cards etc.) which you can’t pay, you may need to consider a Debt Agreement.

A Debt Agreement is an alternative to Bankruptcy.  To qualify for a Debt Agreement in Australia you need to have at least $8,000 in unsecured debts owed to more than one creditor.

A Debt Agreement is a legally binding agreement with your creditors where your outstanding debts to your creditors are negotiated down and a reduced repayment amount is implemented in line with what you find affordable.

For a Debt Agreement to be valid it must be approved formally by your creditors.  We can assist with putting together a proposal to your creditors setting out reduced payment amounts and outstanding balances.  Most creditors understand that if they decline your proposal you may declare bankruptcy and they could lose a lot more than the loss they will incur through the Debt Agreement.

In most cases we recommend a Debt Agreement over a three to five year period.   Once approved by your creditors, a Debt Agreement will protect you against any further legal action by your creditors with respect to the original debt.

With a Debt Agreement, you agree with your creditors what you’ll pay out your debt over the term of your agreement.

Consolidating all your loans into one when you’re up to your neck in debt can be a good thing.  However unless you change your spending habits, it may be a short term remedy only.

With credit so readily available, borrowing money through personal loans and credit cards has never been easier. But it’s not so easy when the time arrives for the monthly repayments, particularly if you’re ‘debt-heavy’.

As a result, some mortgage brokers and lenders have been promoting the virtues of “debt consolidation“. Under this strategy you consolidate all your outstanding, higher-interest debts into one loan with a lower interest rate. It can reduce your immediate monthly debt obligations by hundreds of dollars.

Ideally debts are consolidated into your mortgages because home loan rates are mostly the lowest available and homes provide the lender with more security.

If you  are not a home owner or do not have enough equity in your home, it might be possible to consolidate your debts into a personal loan.

However – this strategy will only work if you break the spending habits that drove you into debt in the first place. While altering habits involves budgeting better and spending less, shredding the plastic cards is also essential!

It’s true consolidation leaves you with a “nil balance” against your cards. But this doesn’t mean the plastic nasties can’t be used again. If unexpected bills hit the mailbox there’s nothing stopping consumers whacking payment on the card.

If you don’t commit to disciplined spending habits, debt consolidation won’t help and may leave you poorer by thousands of dollars.

Bankruptcy rates have reached record levels and debt consolidation loans are  harder to obtain. Think bankruptcy isn’t a possibility? Think again.  Research shows that most people have no idea they will end up bankrupt ,until bankruptcy inevitable. We have Debt Consultants available to help identify what options are available and help you beat bankruptcy. This site also provides information on bankruptcy, debt consolidation and debt consolidation loans, dealing with debt collectors, understanding your credit history and credit repair.

Debt Consolidation Australia has helped hundreds of Australians experiencing debt problems.

If you are in fact considering bankruptcy, there may be other options available of which you may not be aware of .

Debt Agreements are often used as an alternative to going bankrupt. There is less affect on your credit rating by managing a Debt Agreement instead of going bankrupt and can save your assets.

This type of Debt Agreement is regulated by the Federal Government, Insolvency & Trustee Service of Australia (ITSA). It is much better to have a Licensed Debt Agreement Administrator act on your behalf, because all stages of the agreement must be legislated by the ITSA, and will be monitored by them.

According to the second Bankwest Financial Fitness Index, nearly 28% of those surveyed had an over-reliance on debt, little or no regular savings, no insurance coverage and high housing costs relative to income.

People tend to take up extra credit cards and personal loans to facilitate a lifestyle beyond their means.

A majority of Australians, 69 per cent, said 2009 had been a difficult year for them financially, the online survey of 833 Australians across all states, territories and age groups found.

About half of those surveyed reported borderline financial fitness, which included moderate savings, some insurance, average housing costs and moderate debt levels.

Just 22 per cent were classed as financially fit, with regular savings, a range of insurance, low housing costs and high asset levels relative to debt and income.

Retirees aged over 64 were financially the fittest generation, with 35 per cent being financially fit and only 15 per cent classified as financially unfit.

There is no need to wait for retirement before you can put your financial affairs into order.  It is best to take a long hard look at your earnings and spending habits.  If you consistently spend more than you earn – it is time to exercise restraint to take yourself closer to ‘financial fitness’.

Over 1.5 million Australians have ‘bad credit’ because of because of overdue bills and credit card debt.

Most people do not realise how easy it is to damage a clean credit history and the repercussion of this damage.  Even paid defaults stay on your credit report for up to five years and can make getting new loans very difficult.

Figures released to the Herald Sun this week, reveal about 350,000 Victorians have developed bad credit  for not paying utility bills, skipping loan repayments or declaring bankruptcy.

Hundreds of thousands of Victorians are among those risking finance knock backs for taking too long to pay utility bills or missing loan and credit card repayments. The revelation comes as financial counsellors expect to be swamped with households struggling to pay higher water and power bills this year.