While many people with high levels of debt are looking for Debt Consolidation Solutions, not all forms of debt consolidation will necessarily reduce your set debt payments. Some consolidation solutions merely put debts together into a single loan but do not lower debt repayments. Borrowers who carry significant debt may sometimes need to pursue several debt reduction strategies n order to reduce set debt repayments to affordable levels.
Credit Card Strategy
If you are carrying a high level of credit card debt, a great strategy is rolling this debt from a high interest card into a low or zero interest card for up to 12 months. This can be a great solution for anyone who has no credit history problems, merely wants to reduce debt repayments and reduce debt balance. Instead of paying 20% plus on your outstanding debt, you can pay o% or 1% for up to 12 months. The difference can be applied to reducing your credit card debt. If you have more than one credit hard with a high balance, you may apply for 2 credit card rollover deals and enjoy twice as much saving.
If your credit history is in trouble and you are unable to qualify for a cred rollover. You may be successful with a secured debt consolidation or a debt agreement.
Personal Loan Strategy
Borrowers who have several high interest personal loans may be able to put these together into a lower interest secured personal loan. For example Loan 1 $8,000 unsecured at 19% pa
Loan 2 $3,000 unsecured at 25% pa
Could be rolled into a new $11,000 secured personal loan at 10% pa. Naturally to qualify for a secured personal loan you need to have a paid out motor vehicle or a motorcycle or a boat that is worth significantly more than the amount you are seeking to consolidate.
Secured personal loans are cheaper than unsecured loans and may be available to those with some bad credit history.
If you are in an expensive mortgage because you had income or credit history issues when you had originally bought your property. Now may be a good time to refinance to a cheaper lender. Alternatively if you are simply looking to reduce set repayments, you may investigate the possibility of changing your mortgage from P&I repayments to interest only. This is the fastest and easiest way or reducing home loan repayments.
Alternatively if you have sufficient equity in your home, there may be scope to consolidate other more expensive unsecured debt into your mortgage. Naturally you would have to demonstrate sufficient income to qualify for the larger loan. Be aware that this type of consolidation will reduce your set repayments, but not your debt. Unless you make it a priority to also pay down your mortgage principal, your debt can cost you more in the long run. This is because you will be paying interest on it for 20 years instead of 5.
Debt Agreement Strategy
Debt Agreements are a very popular debt reduction strategy. These are a government program for people who are unable to meet their debt repayments and do not wish to declare bankruptcy. Debt agreements allow you to use a debt professional to help you negotiate down both your debt balances and set repayments. You can only include unsecured provable debts into this agreement.
Providing an agreement can be reached with a majority of your creditors, you will achieve reduced affordable debt payments. At the end of the debt agreement period your unsecured debts will be paid out in full. During the agreement period you will not incur any interest on your unsecured debts. Debt agreements are a good solution for people with bad credit, little assets and excessive debts. People in this position will not be able to find another debt solution short of bankruptcy.