3 Reasons to consolidate debt into one loan this year

Are you familiar with debt consolidation? It’s a unique type of debt refinancing in which you obtain one big loan to pay off a series of other smaller loans. Consolidating debt can be immensely beneficial, especially when your credit score is stained by a huge debt accumulation. When you take out a consolidated debt loan, you’re not only able to pay off your mini-loans but you also get the chance to make lower monthly loan payments.

After consolidating your debt, you can forget about making numerous loan payments. Simply concentrate on making one convenient monthly loan payment. Check out Zippa Loans if you desire to acquire such a fitting loan.

Here are 3 Reasons to consolidate debt into one loan this year:

 

  • Reducing your monthly debt payments

 

As mentioned above, consolidated debt loans allow you to pay off an assortment of smaller loans. It’s tedious enough to remember the loans you require to pay. In this respect, consolidated loans come as a great relief to individuals with multiple debts. These loans often have a flexible repayment plan that you can negotiate with your lender. Simply put, it’s far easier to obtain your preferred loan amount and pay using a customized rate.

If you desire to reduce your monthly payment, try consolidating your current debts to a 5-year personal loan. Taking a loan with longer terms helps you to make reduced monthly payments, allowing you to save the extra cash or use it for a different purpose. It’s time you pursued a more convenient consolidated loan.

 

  • Paying off your credit balances

 

When you take up a consolidated loan, you get the unique chance to pay off all accumulated credit card balances. If left unattended, such balances can grow immensely and overwhelm you in the long run. Paying of the existing debts and balances can have a delightful impact on your credit score. You can even upgrade your revolving debt plan to installment debt.

What’s the difference between revolving and installment debt plans, you wonder? Most credit card users utilize revolving debt in which a certain credit limit is set. You then use up as much money as you desire without making any preset number of payments. Basically, the total amount you utilize affects your credit score and utilization ratio significantly. Installment debt, on the other hand, entails making regular payments with a predefined commencing and ending point.  Making constant, timely payments on such loan types indicates that you are responsible enough to handle long-term payments.

 

  • Simplifying your finances

 

Paying a lump sum loan is arguably simpler than paying multiple debts. Picture all the loans you’ve accrued to date: student loans, credit card loans, personal loans and others. You’re required to make multiple monthly payments for all these loans, and these can quite easily take a toll on you. But when you take a consolidated loan, you only have to worry about making a single payment each month. The interest rate is fixed, so you can calculate the exact day you’re bound to pay the entire loan.

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4 Options to getting out of debt instead of going bankrupt

If you are under heavy debt and are seriously considering declaring bankruptcy to just end it all and call it quits, then you are surely going to regret it. Before you jump the gun, let me just tell you that there are many alternatives to declaring bankruptcy. In fact, if you just exert enough effort and time, then you will surely find the perfect alternative to handling your debt instead of going bankrupt. Furthermore, declaring bankruptcy is not just a poor solution to your debt, its consequences can affect your life in the future as well. You see, bankruptcy will forever show on your records and no matter where you go, people will always know that you once quit and walked out of a big challenge. And this will surely affect your livelihood should you pursue employment or start a new business. Fortunately though, as said above, there are many alternatives in getting out of huge debt instead of going bankrupt, below are 4 of them.

 

  1. Negotiate with your Creditors – Debt Restructure

First of all, when declaring bankruptcy, the bank or the government takes over all of your assets and administers the sale of them and the subsequent payment to your various unsecured and secured creditors. While this rids you the hassle and the heartache of dividing what is left of you to your creditors, it is actually a disadvantageous situation for your creditors. In most bankruptcy cases, the creditors get less of what they expect from you even if they know that you are suffering financially.

From this fact alone, we can learn that creditors will be always open to discussion and negotiation about your debt especially if you are on the brink of declaring bankruptcy. Therefore, approach your creditors and sit down with them to discuss if you can restructure the terms of your debt. You can ask for a grace period or lowered interest rates or principal amount. Whatever it is, creditors will always agree to the situation where they can get more. And a bankrupt debtor will always have less for the creditors.

 

  1. IVA Help and Advice

You can also opt for IVA or Individual Voluntary Arrangement instead of bankruptcy. An Individual Voluntary Arrangement is an agreement or contract between you and your creditors, which is administered and supervised by a licensed Insolvency Practitioner which gives you the chance to pay your creditors at an agreed monthly payment which is reasonable to you. The contract usually lasts for five years, and upon its end, the remaining balance and interests are formally waived off. IVA contracts are legally binding, thus, upon entering the agreement, the creditors won’t be able to act against you. If you are interested, then quickly search for the nearest IVA Help & Advice company. The faster you act, the better agreement you can get.

 

  1. Debt Consolidation

Another alternative that is better than declaring bankruptcy is by actually incurring another debt. Though it may sound scary, consolidating all of your debts into one loan might just be the best solution for you. Not only will you be able to pass all of your debts to a single entity, you will also have lesser worries as you will only deal with a single creditor instead of the many creditors you have.

If you want to consolidate all of your debts into one loan, then government affiliated banks are the best for you as they can sometimes have programs that can help improve your financial situation.

 

  1. Sell your Unsecured Assets

If you still have many unsecured assets, then it might also be a better choice to sell them yourselves and divide them among the unsecured creditors. By doing the sale yourself, you are giving yourself the chance of possibly earning more from the sale of the assets. Who knows? You might just solve your debt crisis from amazing sales and prevent declaring bankruptcy.

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Going The Wrong Way

I’ve mentioned before that we are drastically trying to cut down our debts and increase our income. For some reason, life has been plotting against us and for the past few months, we have been going the wrong way.

Outgoings seem to have increased and incomings decreased plus with Jack being at home over the summer = disaster. We are looking into other options so we can get on the right track again.

So what are we considering?

– Myself going back to work again. I’ve always been happy to be out of retail but if needs must through some lean months, I will have to.

– Push myself more. I could probably get more contracts if I pushed myself more and really believed in myself. This is something I need to work on.

Steve take on more overtime. He has already arranged quite a bit for this month, we shall see if this continues over the next few months.

-Work on decreasing any unnecessary expenditure. If that means keeping a money diary, so be it. I don’t want to have made all this progress for it all to get undone.

What would you suggest?