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Simply put, it brings a number of debts into one easy payment. It makes sense that it would be easier to deal with one debt instead of many.
At Debt Fix, we know everyone's situation is different and we understand that there is no “one size fits all” solution when it comes to managing debt. For this reason, we present affordable options specifically tailored to suit your situation.
If you have more than three debts and you’re creditors want different amounts of money at different times of the month you may find it difficult to co-ordinate your payments in a way that works with your budget. If this is the case, consolidating your debt into one easy and affordable loan may well be the answer. Once your debt is consolidated the difficulty in juggling several commitments will be relieved and you can once again feel on top of your finances whereas before it may have been a struggle.
Keeping on top of your finances has never been more important than today in light of the newly introduced credit reporting laws. The new laws mean that potential credit providers now have access to more comprehensive information about your level of indebtedness and more specifically, the way you manage your debt. Until now, credit providers could only see your personal details, credit infringement information and the amount of times you may have applied for credit (assuming that the credit provider made an enquiry).
Nowadays, since the introduction of the new comprehensive credit reporting regime, potential credit providers can assess your loan application relying upon more detailed information about the way your manage your finances and your repayment history for the past 24 months.
This means that if you have a number of debts and you are finding it difficult to manage all the debt and consequently pay your bills late, this will more than likely effect your credit reputation and your ability to obtain a loan.
Consolidating debts may well be the answer to this issue because, by rationalising your many (smaller) debts and having one loan to manage, it stands that it would be easier to juggling your repayments and therefore there is less risk of you paying your debts late and thus decrease the likelihood of any adverse credit reporting.
Naturally there are some consequences which also need to be considered when deciding whether or not to consolidate. The biggest consideration should be paid to the affordability of one large loan as opposed to many smaller debts. In other words, it may be more convenient to have just one big loan, but what is the real cost of that and how does it compare financially to having multiple smaller loans.
For example, if you have six debts and they each want different amounts at various times of the month but on a monthly basis the total commitment adds up to $550. If you were to consolidate all the debts into one payment, it may be more convenient but what if the new loan cost you $700 per month, would it still seem an attractive proposition?
One of the biggest mistakes that people make is assuming a consolidation loan will be cheaper. This is not always the case and interest rates will vary depending on your credit reputation and the lenders assessment of your application.
People also turn to debt consolidation loans as a way to address a debt problem. This too can be an effective debt strategy, although there is one major risk associated with this that needs to be mentioned.
If you have a debt problem and you intend to refinance your multiple debts by swapping debt for one, cheaper debt, it's essential that you cancel the old credit facilities otherwise there is a risk that you will come to use those facilities again and ultimately find yourself in twice as much debt than when you started.
If you have a debt problem and you intend to refinance your multiple debts by swapping debt for one, cheaper debt, its essential that you cancel the old credit facilities otherwise there is a risk that you will come to use those facilities again and ultimately find yourself in twice as much debt than when you started.
A person once said to me that when you’re in a hole and you want to get out of it, the first thing you should do is stop digging. In other words, when it comes to addressing a debt problem, perhaps more debt is not the solution. This may seem like a contradiction to what’s been mentioned previously in this article but it’s important to present a balanced view including both pro’s and con’s.
In deciding what to do, you must look at your circumstances and make an assessment as to what’s right for you, understand all the benefits and consequences. Be realistic and ask yourself whether you are looking for a more convenient way to manage your debts as opposed to trying to stave off a potential financial disaster.
If your situation is more likely to be the latter, perhaps debt consolidation loans are not the way to go. If this is the case, what is the answer and what options are out there for someone struggling with debt.
Are you experiencing financial hardship? Although you have a bad credit rating, help is available at Debt Fix. The best thing about consolidation is bringing all your debts together into one affordable repayment. When you have just the one, affordable payment, all of a sudden your budget becomes much, much easier to manage.
The key word here is “affordable”. Consolidating your debt is only useful when the single payment is substantially cheaper. After all, why would anyone swap bad debt for different, more expensive bad debt?
What does it cost you right now?
To work out whether you’re going to save money, you must first need to know exactly what you are currently paying per month to your debts. Unless you know this, you will never be able to work out whether there is a benefit.
Calculators can be helpful - but they’re not always 100% accurate.
Accept that online calculators are (at best) a guide only and can never take into account your specific circumstances which in turn impact what interest rate you may have to pay. If you complete an online calculator to work out your repayments, accept that the advertised rate may not be available to you and various terms and conditions apply. Give us a call on 1300 332 834 and get help.
A “Yes” can end up a “No”.
If the bank initially accepts a loan application, it is then assessed by a credit approval team who in turn may decline the application.
Keep an Open Mind
There are many solutions for people with bad credit. If you have been declined a loan there are a range of other options which may be suitable.
When it comes to consolidating debts, Debt Fix has the skill and experience to guide you through the process. Everyone’s situation is different and there are always options. Let Debt Fix guide you through the process and present suitable and affordable options to you today so that you can once again feel in control of your finances.
One of the first things you should do if you’re struggling with debt is attempt to speak with your creditors and ask them whether you would qualify for financial hardship consideration. You will find that every financial provider has an obligation to consider an application made by you for assistance or relief. You should note that whilst creditors have an obligation to reasonably consider hardship relief, they are not compelled to grant you relief.
You need to ask yourself whether the debt problem you’re trying to address is likely to be permanent or temporary. If you believe the debt issue is likely to be temporary because the circumstances about it are not likely to be lasting, then some short term financial hardship may well provide adequate remedy. On the other hand, if your circumstances are not short term and your financial situation is dire and unlikely to change in the short term, not only is a debt consolidation loan probably not the right way to go but short term financial relief is unlikely to provide any long term benefit.
In this way, it’s only when you reach out and speak to a professional team like the expert people at Debt Fix can your options be explained to you in a straight forward way. If you’re anxious about your situation, you can’t get a loan and you have no assets to sell, Debt Fix has a range of options to address your position and avoid the harsh consequences of Bankruptcy.
If you believe that consolidating debts is the best way forward; a little homework goes a long way. These are my top four tips to finding the best way to consolidate debts:
Q: I've tried everything and no one has been able to consolidate debts. How can Debt Fix help me?
A: Debt consolidation is our business. However you think your situation is, we are confident we can find a solution for you.
Q: I have debt collectors chasing me and it’s stressing me out, I need debt help fast!!
A: We act fast to relieve the stress. We speak to your creditors so you don't have to.
Q: If you can’t help me, how much will my application cost me?
A: Debt Fix will never add to your bad debt issue and we have a "No Fix, No Pay" policy.
Often when someone needs a debt solution due to struggling under multiple debts they automatically believe that a debt consolidation loan is the only answer. But this is not always the best way to go. Read more...
Have you worked yourself into a financial pitfall of debt that you simply can’t seem to climb out of? Here are 6 tips that may help you. Read more...
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