While most people who are looking around for debt consolidation help are actually searching for a personal loan to put a range of more expensive debts into, it is next to impossible to qualify for an unsecured personal loan if you have problems with your credit history. This does not mean that a person with bad credit can not qualify for debt consolidation help – they can but the solution will not be an unsecured personal loan.
Secured Personal Loan
A bad credit history will not stop you from qualifying for a secured personal loan. You do need to be able to offer an unencumbered motor vehicle to secure this form of finance. They can needs to be worth a fair bit more than the amount you need to consolidate. Potential borrowers should take the time to understand what this form of consolidation will actually cost them to ensure that a desired outcome is being achieved. There is no point putting several debts into one if the overall cost is not reduced.
Mortgage Refinance
Those who are lucky enough to have property with available equity, can do very well by consolidating unsecured debts and even unpaid defaults into their mortgage.
But here’s what your mortgage is likely to cost you now that you seem to have some credit history issues. If you have a bank home loan and in recent months have acquired a credit problem, then it may not be financially viable to refinance the current loan from a bank rate to a more expensive non-conforming lender in order to save interest of your other debts.
Debt Negotiation
If you are unable to qualify for either of the above consolidation solutions, perhaps an informal arrangement with your creditors will do the trick. Speak to the credit providers and ask them to work with you given your current situation to get you over your current debt problems. It may seem like a stretch, but many credit providers are happy to help you out. They prefer to work with someone who is making an effort to meet their debt obligations instead of someone who simply ignores issued statements and makes no payments. This may work well if your current situation is short term and you will be able to catch up on debts after a short payment holiday or a period of reduced repayments. As a long term debt reduction arrangement a debt agreement is better.
Debt Agreement
A debt agreement is not a new loan and your bad credit history will not preclude you from qualifying for assistance. There is some criteria in terms of income, asset and debt levels of the applicant.
A debt agreement is a solution for people who can not afford to pay their debts, it is not a strategy to save money – rather it is a strategy to become debt free.
If you can not maintain the current payments on your credit cards, personal loans and other unsecured forms of finance, then a debt agreement may be the answer. If your creditors accept you proposed schedule of payments instead of the existing one then you can start reducing your unsecured debts without incurring any penalty interest and be well on the way to becoming debt free.
