If you are facing an impossible and terrifying amount of debt to various creditors, then a debt consolidation service could be the answer to your problems. Debt consolidation services can help you get out of debt quicker than you ever imagined, as well as helping you save thousands on crushingly huge interest rates.

When you apply to a debt consolidation service, they will help you work out everyone that you owe money to.  Whether it is credit cards, store cards, personal loans or a combination of all three, your debt consolidation service will work with you to bring a timely conclusion to your debt obligations with them.

All of your debt will then be combined into a single monthly repayment. Unlike your previous debt arrangements, you will only have to deal with one payment and you will only be made to pay what you can comfortably afford. You’ll also be pleased to see an end to massive interest rates and late fees. Debt consolidation services can also help you avoid more extreme debt recovery methods like selling your home or bankruptcy.

When applying for a debt consolidation loan it is might be a good idea to secure the debt against some personal property, such as a home or a car. If the  loan is secured on property you may get a lower interest rate. Credit cards, store cards and unsecured personal loans aren’t secured to any property. That is why the interest rates are so incredibly high. You will almost always get a better deal when the loan is secured on your home or car, and because you’ll never be asked to pay any more than you can afford you can rest easy in the knowledge that you’ll always be able to pay off your monthly debt. If you keep paying your debt, then your home or car will never be at risk.

Debt consolidation services can also vastly improve your credit rating. Individuals who owe a lot of money often have problems in their credit history, defaulting on loans and other obligations. A debt consolidation service can help you repair this damage, making your credit history much better for the future. Your credit history is incredibly important and once you’ve successfully repaired it then you will have a much easier time getting credit in future.

There are lots of different debt consolidation services to choose from, and each of them has different terms and requirements. Debt free we can advise you on the best options for your particular situation, and help you escape the chains of debt. if you would like more specific advice about debt consolidation services, feel free to contact us either by phone, or by requesting a free debt assessment.

At Debt Free we help people assess their financial credentials and we will be able to advise you if you are likely to succeed with a debt consolidation loan application.  If you have been refused a debt consolidation loan, don’t fear as we may be able to help you with another debt solution.  We offer a genuine free financial debt assessment.

Most of the large financial institutions offer debt consolidation loans but post the GFC they have strict application criteria.

If eligible, a debt consolidation loan can help you manage your finances as you will only have to make one payment instead of multiple payments. Subject to shopping around you may even be able to reduce your total interest cost which will help you start to clear your debt.

Most debt consolidation advice companies won’t lend you money and they will refer your application to a financial institution.  As such you are best placed to ask your debt consolidation advice company for an assessment to establish if you qualify for a debt consolidation loan. We offer a genuine free financial debt assessment, so call today for your free assessment or apply on-line 24/7.

• interest rate
• loan establishment fees
• monthly account keeping fees
• monthly repayments
• prepare a monthly budget
• term of loan
• What loan should you select

The interest rate

The interest rate for debt consolidation loans is usually advertised as a per annum figure, for example 12% p.a.  Interest is usually calculated monthly on a compound basis which means if your account is charged with additional fees and charges the interest will compound at a higher amount.  Additionally if you miss payments you may be charged a default rate of interest.  Make sure you enquire is the loan has a default rate of interest.

Loan establishment fees

Some financial institutions charge a loan establishment fee for a debt consolidation loan.  Make sure you enquire how much the loan establishment fee is and when it is payable.

Monthly account keeping fees

Some financial institutions charge monthly account keeping fees or monthly payment processing charges for debt consolidation loans.  Make sure you enquire about these fees and charges as it will effect your total debt consolidation loan repayments.

The monthly repayments?

Most debt consolidation loans are repaid monthly. Given interest is usually calculated on a compound basis and charged to your account monthly you need to ensure that you can afford the repayments. If you fall into arrears on your debt consolidation loan the lender may be entitled to charge default interest on your loan.  If default interest is charged the debt consolidation loan balance will escalate significantly and the lender may call in the loan balance (ie approach the court for a judgment that it be repaid immediately.

Prepare a monthly budget?

We highly recommend that you carefully prepare a monthly budget before you apply for a debt consolidation loan to make sure that you can afford the monthly repayments. The lender who provides the debt consolidation loan will ask you to submit a budget with your debt consolidation loan application and will most likely also ask to see source documents like payslips and perhaps  bank statements.  The lender will need to be satisfied that you can afford the debt consolidation loan repayments.

Term of loan

We recommend that you consider a loan term (ie repayment period) of no longer than 5 years.  If you cannot afford the loan repayments on a 5 year term then you may need to consider other options.

What loan should you select?

We recommend that you shop around the market for a loan with low interest rate fees, low establishment fees and low account keeping fees.  Remember the combination of these fees and charges will effect the total effective interest rate and the period in which the loan will be repaid in full.

If you need advice call us today toll free on 1800 501 252 we don’t sell consolidation loans so you will get unbiased advice.

Carefully consider the legal implications

If you fall into arrears with a debt consolidation loan and you can no longer service the loan (ie you cannot afford the repayments or the lender demands full repayment because the loan has fallen into arrears) you may not be eligible for other debt relief solutions.  Typically lenders will not consider proposals for other debt relief solutions if you have recently taken out a debt consolidation loan which has later fallen into arrears.

We therefore highly recommend that you carefully prepare your budget to make sure you are confident you will be able to afford the repayments. If you are struggling with debt before you apply for a debt consolidation loan, we recommend that also consider other debt relief options which may be more appropriate.

My debt consolidation application was refused – what do I do now?

If you have applied for a debt consolidation loan but your application has been refused and you are struggling with debt, you may wish to consider your other options.

We specialise in helping people solve their debt problems and provide free and professional advice to Australians.  We can help you select the most suitable solution to solve your debt problems.  The most successful types of debt solutions include:

• Equity release
• Informal arrangement
• Financial hardship
• Strict budgeting
• Debt agreement
• Personal insolvency agreement
• Bankruptcy

Selecting the appropriate product will depend on your financial circumstances.

Take control of your finances today and get the debt advice you can trust. Call us toll free on 1800 501 252, our initial personal debt advice is FREE of charge and without obligation so you have nothing to lose. Get Debt Free today!

The benefit of an informal arrangement is that you may be able to keep your credit rating in tact if you stick to your agreed repayment plan. It is critical that you honor your commitment if you can agree a repayment plan.  If you are not able to honor your commitment your creditors may lose patience and collect the debt through the court system which may lead to your bankruptcy or the sheriff repossessing your property

An informal arrangement is more likely to be successful if you only have a small number of creditors (like 1 or 2 creditors). If you have more than 2 creditors it may be different to reach agreement with each creditor. Notwithstanding you may reach agreement your creditors may be entitled to demand full repayment at some later stage.

If your creditors cannot assist with financial hardship you may wish to consult with a financial counsellor.   Many charities (like the Salvation Army, Lifeline Australia, Wesley Mission, the Smith Family, Red Cross and many others) offer free and independent financial counselling services. A financial counsellor may be able to help you with a short term financial crisis and provide you either truly unbiased advice.

Depending on your level of debt, you may be able to successfully  repay your debt through strict budgeting.  Strict budgeting is the center point any debt repayment program. With any debt repayment program the first step is to always prepare a budget that you can stick to.  There is likely point in preparing a budget unless you strictly stick to it.

The first step in preparing a budget is to estimate your average income over the course of your usual pay period, for example if you are paid weekly then calculate your average weekly income.

The second step in preparing a budget is to document all of your expenses.  This process includes identifying expenditure which you don’t necessarily incur every week or every month.  These types of expenses may be incurred quarterly or annually, like insurances, electricity, car registration and car maintenance etc. It is critical that you identify all of these expenses and make an allowance for them in your weekly or monthly budget.

The third step is to ensure that your average income exceeds your average expenditure.  If your income exceeds your expenditure then that surplus can be used to repay debt. If your expenditure exceeds your income you will need to reduce your expenditure or consider working a second job. Your budget before repaying debt must be in surplus.

To consolidate debt means to bring together all debts into one monthly payment. We provide advice to Australians as to how they should deal with personal debt and the options available to consolidate debt. The burden of personal debt can be very stressful and it is critical that you speak to industry experts who understand all products that are available.

The area of personal debt is very complicated and there are many products to choose from. Not many companies offer the full range of debt consolidation solutions and as such their advice may be biased towards the products they offer.

How does debt consolidation work?

The concept of consolidating debt is to take all the debts you owe to many different creditors (lets say you have 5 different creditors) and you then consolidate those debts into 1 debt.

Typically people believe that the only way to consolidate debt is to apply to the bank for a debt consolidation loan. Whilst that is a proven method of consolidating debt for people who are solvent, it is not appropriate for people who are insolvent (ie people who cannot pay their debts as and when they fall due).  Therefore for people who are struggling with unmanageable debt they may wish to consider other legally accepted forms of consolidating debt for example a Debt Agreement or a Personal Insolvency Agreement.

If you are struggling with unmanageable debt, you may benefit from a  Debt Agreement or a Personal Insolvency Agreement.  With a debt agreement or personal insolvency agreement the interest will be frozen on your debts and you will enjoy debt relief (ie usually you do not repay 100% of the debt).  This will enable you to pay off the debt within a shorter period of time. A Debt Agreement or a Personal Insolvency Agreement isn’t appropriate for all people and strict application criteria and long term consequences apply.

When is a consolidation loan not appropriate?

If you are on a low income and have a high amount of debt you may not be able to afford the loan repayments for a debt consolidation loan.  In fact you may be insolvent. If you are offered a consolidation loan make sure you can afford the loan repayments and the interest rate is reasonable. We wouldn’t recommend a consolidation loan longer than 5 years.

How can we help you?

We provide a professional and impartial debt assessment for a fixed fee of $99 which will outline which product is best for you. We are open 5 days a week from 9am to 5pm.

Call us today and we will discuss the range of debt consolidation options. We are open 5 days a week. Call now on 1800 501 252

• Instead of eating out every night, cook at home. And when you cook at home, make it a two night meal. Anyway, many people believe that food tastes better the second night.
• Name brand merchandise is great to have, but if you are trying to save money, store brands are just as good. Some store brands are made by name brand companies and are the same product, just with the store brand name. And they are just as good, if not better.
• If you watch movies, consider checking them out from the public library for free, instead of paying for them at the video store.

• If you smoke, cut back or quit. If you drink beer, liquor, and/or other alcoholic beverages, cut back or quit. These are expensive habits and by quitting or cutting back, you can save yourself a lot of money.
• Coupon shop. Coupons are a great way to save money and most grocery and warehouse stores offer discount cards that can save you significantly.
• Learn how to barter with others. There are many people who love to barter and trade.
• Give up expensive hobbies.
• And most of all, stop competing with the jones.

It’s the little things that can make you, or break you, when it comes to being debt free.