Formal Debt Consolidation
Debt Consolidation Video Library
We provide advice on debt consolidation and debt relief solutions to Australians who are struggling with debt. Debt consolidation can be a useful tool for consolidating debt, but there may be pitfalls that many people don’t know about and other options available that some other companies will not always disclose to you.
Firstly a debt consolidation loan through a financial institution will only be possible for people with an excellent credit record and a strong and sustainable household income. If you have defaulted on any loans or credit cards it is highly likely that your credit file will be marked and it will be problematic to obtain a debt consolidation loan whilst the defaults are listed on your credit file.
What do we do?
At Get Debt Free, we do not offer debt consolidation loans as we are a provider of debt relief solutions. Despite what some companies may say a debt relief solution (like a Debt Agreement or a Personal Insolvency Agreement) is not debt consolidation – so don’t be confused.
We like to educate readers of our site as to the key differences between a debt relief solution and a debt consolidation loan so people can make an informed decision. A debt relief solution may achieve a similar objective (ie combining several debts into a single payment per month), however, the differences are significant:
Below we provide a brief summary of the key differences:
|Debt Consolidation loan||Debt Relief Solution|
|Combining several debts into one regular payment||
|Available to people with poor credit rating||
|Recorded on credit file||
|Ability to borrow again after successful completion||
*If you have successfully completed a Debt Agreement or a Personal Insolvency Agreement you may be able to borrow money again but it will be subject to the lender’s criteria at the time of your application. You cannot apply for a loan whilst subject to a Debt Agreement or a Personal Insolvency Agreement you
What is debt consolidation
Debt consolidation is simply the process of combining all of your individual debts into one single debt which then becomes repayable monthly (or any other frequency you select). Debt Consolidation loans are usually only offered through financial institutions like banks or other lenders. We recommend that you only deal with reputable financial institutions. Before you decide which financial institution, you should ask:
- Do you have a banking licence
- Do you have a responsible lending policy
- Do you help me prepare a sustainable budget so I am confident I can afford the loan
- What security for the loan do you require
- What are the fees and charges with the loan
It is important to ask these questions and get straight and honest answers. If you ask these questions of a reputable financial, they will not hesitate in answering them. If the lender cannot answer these questions straight away you may be best placed to enquire elsewhere.
What is debt relief solution
A debt relief solution is structured to combine unaffordable debt into a single payment per month (or any other frequency you select, ie fortnightly or weekly). Unlike a consolidation loan a debt relief solution is not a loan, rather it is a formal agreement entered into with your creditors and must be supervised by a qualified and regulated professional (usually a Debt Agreement Administrator)
Use the following links to learn more about debt consolidation:
Introduction to debt consolidation Loans
A useful introduction to debt consolidation loans
Was your debt consolidation loan refused?
Learn more about debt consolidation for people with bad credit
Debt consolidation loans for people with bad credit
If you have bad credit it can be hard to get a debt consolidation loan, but we can help.
How do you know if you should get a debt consolidation loan?
Knowing what is the right path to take can be hard. We can give you advice
Things to consider before taking a debt consolidation loan
Deciding whether to get a debt consolidation loan is difficult. You should consider these factors before making your decision