The best way to figure this out is to discuss it with a professional debt advisor, such as those at the  Get Debt Free. If you want to learn a little more about these types of loans please read on. This article should get you feeling a little more confident in knowing whether or not a debt consolidation loan is right for you.

If you have been reading the other sections of this site, you should already have a pretty good understanding of what a debt consolidation loan  is. Just in case you haven’t see that article, a debt consolidation loan is a one that you take out to repay several other debts. The idea is that it makes it easier for you to keep a track of your repayments and it may also help you save a little on interest and account keeping fees.

Is it right for you?

Ultimately, the answer to this question is going to depend largely on your particular circumstances. If you have lots of different debts (like credit cards) and you are struggling to keep track of the repayments, a debt consolidation loan might be worth considering.

One of the things we always hear from our clients is that they get discouraged when they open their bills every month and see that the amount they owe never seems to reduce. This feeling of treading water, which can be caused by things such as late payment fees or penalty interest, only adds to the stress that someone in debt feels. With a debt consolidation loan, you might be able to see better progress, due to the fact that you are making one larger repayment that is easier to keep a track of. This can help keep you motivated and is less stressful than seeing many debit balances that never seem to go down.

If you still have any questions, or would like to talk to someone who has lots of experience working with people are in debt, then we can help you work out if a debt consolidation loan is the right option for you. Our free advice line is contactable on 1800 98 10 70.

A secured loan is debt which is secured by property. Most common types of property taken as security is real estate, motor vehicles, boats, caravans etc,  however other assets can also be taken as security to back the loan. Security can also be referred to as “collateral”. Once you have provided an asset as collateral the lender will usually register its security and you will not be able to provide (or pledge) this asset as collateral for any other loan.

What this means is that if you fail to repay the loan (as agreed with the lender), the lender can repossess the security and sell it.  This type of action is commonly referred to as a “repossession” or a “foreclosure”.

There are many reasons why lenders insist on taking security for a loan.  The most common reason is that it protects the lender against the risk of default.  If the lender has taken good security then it reduces the risk of losing money in the event of default.  If the lender can reduce its risk of default it will usually offer a reduced rate of interest. The time period for secured loans tend to be longer given less risk is involved.

Unsecured loans

An unsecured loan refers to debt which is not secured against any property.  This means that if you fail to repay an unsecured loan the lender cannot repossess an asset in the event of you defaulting on the loan.  However, if you fail to pay an unsecured loan and you owe the lender more than $5,000 (current as at March 2012) then the lender could force you into bankruptcy by an order of the court.  This process is much more complicated and costly for a lender and as such lenders tend to charge higher interest rates to protect themselves against this additional risk. The time period for unsecured loans also tend to be shorter given the high risks involved.

John found out quickly he could not cope with his commitments and the debts started to fall into arrears.  The creditors were ringing him every day and were hounding him for money.  John now suffers from depression and needs medication to cope with his anxiety.  John went to his local bank and applied for a consolidation loan but it was refused.  He was refused as his debts were in arrears. He spoke with a friend of his with whom he confided and his friend suggested he call Get Debt Free to find a solution.

John’s debts totaled $49,471 and his minimum monthly repayments were $1,009 per month. In the Debt Agreement Proposal John offered to pay $338 per fortnight for 130 fortnights (5 Years) to his creditors. This represented a reduction of his monthly payments in the amount of $276.  In total John’s creditors would receive $33,006.64 making the return to creditors 65 cents in the dollar as full and final settlement of his debts.  The creditors voted on his proposal and it was later accepted.  Once John has finished his obligations under the Debt Agreement he will become Debt Free.

If you would like to find out more about a Debt Agreement contact us on 1800 677 551 or apply on-line for an instant preliminary assessment.

Repaying only the minimum monthly amount required will take years to repay the debt. We recommend that you repay as much as you can afford every month and you will save a small fortune in interest and you will become Debt Free much sooner!

Stop using the cards

It might sound obvious, but continuing to use your credit cards just puts the moment that you will become debt free further away. If you need to make a purchase, wait until you can afford to pay for it with cash.We strongly recommend that you stop using your credit card and apply for a debit card.  With a debit card you can only spend the credit that you place on the card. Many banks now offer debit cards and are becoming very popular.

Consolidate your debts

If you have more than one credit card balance, chances are you might be finding it difficult to keep track of all of your repayments. Missing a repayment can mean late fees and some credit cards may even impose a penalty rate of interest. 

By Consolidating your credit cards you can take advantage of two things:

• You can reduce the number of individual repayments to be made each month. This makes it easier from a practical point of view in that you only have to make one payment per month.
• If you qualify for a consolidation loan or a credit card balance transfer you may also be offered a low introductory interest rate.

Still unsure about credit card debt?

If your credit card debts are no longer affordable, you may need to consider other options.  Please call today and consult with our personal debt advisors.

At get debt free we can help you work out an affordable budget to help solve your debt problems. To speak to one of our advisors call our tol free line on 1800 80 10 70

Meryl informed us that every month she would put most of her pay onto her credit cards and only lived off a small percentage of her income. By the end of the month Meryl found herself drawing ‘cash advances’ from her credit card to buy food.  What Meryl didn’t realise is that the ‘cash advances’ attracted a very high interest rate and her efforts were being quickly eroded. Meryl found herself in a vicious cycle of debt which she could no longer control or face on a day to day basis.

Meryl’s accounts fell into arrears and a black mark was placed against her credit file. Meryl applied for a consolidation loan, however, it was refused by her bank as her accounts had fallen into arrears and her credit file had a black mark against it for late payments. Her bank advised her to re-apply after six months if she had cleared her arrears but this is something which Meryl could not achieve.

Meryl’s felt she needed professional help particularly after creditors started to threaten legal action.

After contacting Debt Free, we worked out a sustainable budget for Meryl and established that she could only afford to repay $1,560 per month.  This compared to her current monthly minimum repayments of $2,404.80 per month which seh was trying to make.  We recommended to Meryl that she should offer the amount of $1,560 per month or $720 per fortnight to her creditors. This represented an offer of 70 cents in the dollar in full over 4 years which in our experience was an acceptable offer to creditors.The 30 cents in the dollar will be legally written off or settled after completing the Debt Agreement.

Debt Free assisted Meryl with preparing a formal Debt Agreement Proposal and her creditors accepted it after approximately 35 days and it then became legally binding on all parties. This meant that Meryl was now protected by the Debt Agreement and no creditor could take any enforcement action at all.  In fact  Meryl’s creditors must now contact Debt Free and Meryl can get in with her life.

If you would like to find out more about a Debt Agreement contact us on 1800 98 10 70 or apply online for a free preliminary assessment.

Paul is a single man employed as an Interior Decorator who was struggling with his personal loan and credit card for more than 12 months. Paul was earning just under $50,000 per annum. Paul’s troubles began when he lost his job due to a drink driving charge. He was then forced to give up his current employment and found local employment.

Whilst Paul was unemployed his debts kept mounting up as he could not pay them as they fall due. Some creditors lodged defaults on his credit record and one creditor threatened legal action.

Paul was struggling to keep up with all his payments, including his secured car loan repayments. He called Debt Free when Esanda had repossessed his car. Paul’s accounts fell into arrears as he did not even have the money to keep up even the minimum monthly payments. His debts totaled $39,683.00 and his minimum monthly payments were $1,737.72 per month or $404.12 per week.

Get Debt Free did a free debt assessment for Paul and prepared a budget which Paul felt he could afford.  After that Debt Free then prepared a Debt Agreement Proposal which included a weekly contribution into his Debt Agreement of $150 per week.  

This represented a saving on the minimum monthly payments of preparation of $254 per week. Paul agreed to pay this weekly amount for 260 weeks (5 years).  The creditors accepted his Debt Agreement proposal and Paul was delighted.  Paul’s creditors will receive a dividend of approximately 70  cents in the dollar over 5 years.  

This Debt Agreement proposal provided creditors with a better return than what they would have received if Paul had been forced into bankruptcy.  Once Paul has paid his 260 payments of $150, his debts will be fully satisfied and the 30 cents in the dollar will be fully written off.

If you would like to find out how a Debt Agreement proposal could be tailored for you please contact us today on our toll free line on 1800 9810 70 or apply online for free debt assessment.

I would like to thank you and your team again for all the help and understanding with our situation.  When my husband lost his job we thought that he would only be unemployed for a short time.  As time went by and the longer it was taking to find a job, we went into survival mode, using credit cards, robbing Peter to give to Paul just to get by and make ends meet.

During this time there was also 5 deaths in the family and our family dog was put down due to bone cancer in the November.  A week before Christmas, and a month after losing our family dog, our other dog was diagnosed with a tumour on her leg which would become inoperable if they didn’t operate straight away, so four days before Christmas she had the surgery.  Needless to say, we had a very depressing Christmas and new year, hoping that the new year would be better.

Our financial situation took a nose dive the longer my husband was working casual and out of permanent work.  Whilst he was working casual, he would not know sometimes until between 8pm-10pm the night before if he was working the next morning.  Sometimes by time he would find out it was too late to try and get work through another agency.

Twelve months later, he found a permanent job, but it was too late for us to pull ourselves back up financially as all the debt started to catch up with us.  Unable to sleep, we were sinking.  We were under so much stress.  It was one of the worst years of our lives and we needed help.  It looked like our only option would be to become bankrupt.

I had been doing some research on how to get out of debt when I saw an advertisement on the television advertising a company that helped people in our situation.  I called them but they didn’t seem interested in listening to our story and it made me feel that we were on our own.

I continued to research and found an advertisement on the internet for get Debt Free.  I read through all the information and found that we had a couple of avenues to explore other than becoming bankrupt.

I called them and found them to be extremely sympathetic and helpful.  They sent out a kit with all the information and an application to fill out so they could accurately assess our situation and advise what our options would be.  From that moment, for the first time I felt that there was hope for our situation.  Finally someone was listening and appeared to be interested in helping us.

Amber you took us on and told us that there was a light at the end of the tunnel even though we couldn’t see it.  You worked patiently with us while we were stressed and upset with our situation and feeling that there was no way out of it.  You advised  us that a PIA was our best option and we would be able to keep our home and not become bankrupt.

There were times that I felt things weren’t happening quick enough because we continued to sink and the calls and the letters from creditors were coming daily, but you kept reminding  us that there was a light at the end of the tunnel and each day we were getting closer to that light, even though we couldn’t see it yet.

When we met with you, and you advised us that the PIA had been approved, I felt such a relief and a weight lift off my shoulders.  It had been such a long time since I felt that way. Thanks to all the hard work that Amber and the team put in @ get Debt Free, we now have the PIA and even though we still have a long way to go, we now know that at the end of the agreed time when the PIA Is finished we will no longer have that debt.  Needless to say the phones have now stopped ringing with calls from creditors.

Amber, thanks to you we can finally sleep and see a future.  When you and Anthony (our Controlling Trustee) announced that the PIA had been approved, I could finally see the tunnel with you at the end of it showing us that there was such a bright light, and from that moment on our lives would change.  Just like you told us it would.

We would highly recommend you to anyone that has found themselves in the same situation as us and tell them that there are not on their own and to seek help.

Thankyou again Debt Free

Trish