A Guide to Helping You Avoid Debt Consolidation

Many a time, we find ourselves plagued by huge amounts of debts that we cannot manage to pay back on time. On hearing about these debts, a financial advisor may recommend that you perform debt consolidation so as to have all the debts as one large debt and start repaying it slowly. In as much as it can help you remember to pay the debt promptly, it is normally very costly as it involves taking another loan with different terms to repay another loan. Good news is that one does not have to perform debt consolidation in order to repay a loan. There exist many alternatives that can be used to repay the loan helping you avoid paying more than is required for your debt.

debt consolidation

Alternatives to Debt Consolidation Help

Instead of stacking all your debts into one massive debt, you could develop a strategy that will enable you to pay all your little debts in a stipulated timeline that would be suitable for you. Really, all you need to do is purpose to pay off your debts. The strategy below is one of the best known debt recovery procedures that does not involve debt consolidation

1. List all your debts from loans: This should be the first step since you never really know how much money you owe until you sit down and note down all your sources of debt which may include loans or even credit cards. Ideally, you should list them from the one with the highest interest to the one with the lowest. The one with the most interest should be purposed to be paid faster than the low-interest ones since as time goes by high interest loans accrue a lot of interest making them even more difficult to clear.

2. Add the loan minimum payment: When you note down the amount of money you should pay every month to clear the debt every month, it helps you stay focused on your goal of paying the debt.

3. Decide on Constant Payment: After knowing the amount of money you need to repay every month, it is imperative that you decide on when exactly you will be making the payments as this will serve as a great motivation for making the payment to completion. While you are deciding on the payment you need to make to cover the loan, you need to allocate an extra amount of money so that you can pay the debts faster. This extra cash may be gotten by doing some extra jobs here and there to supplement the debt payments.

4. Negotiate a lower interest rate: This technique only applies for credit card loans. All you need to do is call your credit card service provider and tell them that you are considering cancelling usage of the card. This will prompt them to find out whether you qualify for a lower interest rate which may work more to your advantage if they approve a reduced interest rate for the credit cards you have taken with them.

The above procedures will help you recover your debt successfully without debt consolidation. However, these methods need a lot of discipline to implement and can backfire if you are not disciplined enough.

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Personal Bankruptcy protects from any legal actions by the creditors

For those people whose financial circumstances are not going to change in any way, and there is no hope that they will be able to pay off their debts in the near future, Personal Bankruptcy is the best solution. It is a legal way which helps them to come out of that unwanted circumstance. Personal bankruptcy and debt that can’t be paid back have some legal solution for the person who is facing this situation.

When somebody announces himself as bankrupt, most of his unsecured debts are written off, allowing him to start everything afresh. But personal bankruptcy rules mean you will face certain restrictions.

Basics of Bankruptcy

As far as any individual is concerned, in Australia, personal bankruptcy and debt are controlled by the Bankruptcy Act 1966.

Once a person is declared bankrupt, he needs to give up all control over his finances and assets to a Trustee. This legal procedure protects him from legal actions, which could have been taken by a person or organization who had given him credit loans. The law protects the person and his personal assets from many adverse situations, while at the same time enables the creditors to recover some part of the given loans legally.

Minimum amount that you need to owe

One can announce himself as bankrupt anytime, no matter how much he or she owes. However, a creditor can make a person bankrupt only when the minimum bad credit loans amount to $5000 in Australia.

Consequences after being bankrupt

· Once a person is announced bankrupt, his all unsecured creditors will stop contacting him to recover the loans. This will also be relevant for joint debts and the amount the person owes to his family or friends.

· Legal actions with respect to unsecured loans will be stopped.

· If any unsecured creditors continue to contact the bankrupt person, then he can bring it to the notice of the trustee.

However, there are some kinds of existing debts which the bankrupt person needs to pay back, which include:

· Various penalties and fines already existing and imposed by the court.

· Damages from accidents which the bankrupt person is directed to pay by the court.

· Student’s loan

· Utility bills

· Additional debts incurred after your bankruptcy.

Bankruptcy protected property

The entire matter of Personal Bankruptcy and debt is controlled by Australian Financial Security Authority (AFSA) who appoints a trustee on behalf of the bankrupt person. AFSA normally excludes the following properties and assets from being ceased or sold by the creditors- For more info, check out Debt Mediators.

· Tools used for generating income.

· Normal household assets like TV, Refrigerator, Kitchen Appliances and furniture, etc.

· Cars and Motorbikes up to a certain wholesale price.

· Superannuation funds and life insurance values.

· Compensation for a personal injury.

· Awards achieved personally.

· Any property in custody of the bankrupt person on behalf of someone else.

Life after being Bankrupt

Bankruptcy affects a person adversely, but he still has many options while bankrupt. He always has the opportunity to start everything newly. On certain financial matters, such as to get any credit in the future or to get an employment, he will find himself in a disadvantageous position. However, everything normalizes with time if proper action is taken. Get more details here https://www.debtmediators.com.au/bankruptcy/.