Individuals with a degree of indebtedness that is no longer manageable often find themselves weighing the few options they have left, options that are typically narrowed down to either debt consolidation or an outright declaration of bankruptcy.

Although neither is an ideal course of action, one may be better than the other given the unique financial circumstances of those looking to recover from the financial burdens now upon them.

What is Debt Consolidation?

Debt consolidation requires entering into a formal agreement with a debt consolidation lender (of which there are many) that will consolidate your multiple payments into a single, lower payment. The advantage of debt consolidation is that your interest rate is typically lowered along with your monthly payment, and you will have an extended period of time over which to repay the entire consolidated sum. Apart from the peace of mind that consolidation offers, the freedom to not be harassed by creditors is another welcome advantage.

Although securing a debt consolidation opportunity will place a blemish on your financial and credit history, getting out of debt is vitally important and will eventually help your credit more than hurt it. As a result of getting a consolidation loan, your lender may require you to cancel some or all of your credit cards to ensure that they are not maxed out again while your consolidation loan is in repayment.

The downside of credit consolidation involves a number of commonly unknown drawbacks, including administrative charges. Because many consolidation loan providers are less than reputable, it is important to research any company you are planning to do business with to investigate any evidence of untoward behavior, consumer litigation, and improperly sufficient licensing and registration. Use our form below to contact our debt expert or alternatively ph: 1300682195

   
 

The Truth About Bankruptcy

No one should ever convince you that bankruptcy is a good thing. But it can be an alternative worth entertaining under certain precarious financial circumstances.

Conventional wisdom would seem to hold that consolidating debt is almost always a better choice to make than bankruptcy. However, not everyone can secure a reputable consolidation opportunity. And doing business with a less-than well-regarded or established lender could turn a difficult fiscal challenge into an irreparable one.

Bankruptcy, no matter how it is presented, will always carry a negative stigma.

Yet, in Australia, bankruptcy is a subject that is often misunderstood. Bankruptcy in Australia is administered by a government agency called ITSA (the Insolvency and Trustee Service Australia).

When debt consolidation isn’t available or a viable option, bankruptcy can be used to solve financial problems, but should only be considered as a last resort or as an appropriate course of action after first speaking with a bankruptcy or insolvency specialist.

On the whole, declaring bankruptcy carries certain, almost universal advantages, including any legal proceedings that have begun against you must stop promptly and creditors cannot begin any additional proceedings. Despite conventional wisdom to the contrary, declaring bankruptcy doesn’t outright guarantee that you will lose your home or your car. However, as with consolidating debts, declaring bankruptcy (which comes with a host of expenses of its own) will not necessarily eliminate all of your debts. Any outstanding debts that must still be paid (if any) are determined by individual circumstances as well as the governmental jurisdiction in which the bankruptcy takes place.

Which Choice is the Right Choice?

Declaring bankruptcy or consolidating debts is not an easy decision. Yet, frequently, the decision will be made by your circumstances. If a consolidation opportunity is available, most prefer to work toward repaying their debts in a manageable fashion. If such a consolidation program is unavailable, bankruptcy is the only other route to a fresh start. And, ultimately, that is why these opportunities exist – to provide indebted individuals with the opportunity to regroup and regain solvency. Despite the stress associated with consolidating debts or declaring bankruptcy, it is important to maintain faith in these options and look to a debt-free future as the outcome of proactive decisions today.