How Do You Consolidate Your Debts and Avoid Bankruptcy?

The burden of personal debts and interest rates is indeed one of the most stressful situations. Besides, having minimal funds to pay it off might add stress. However, you can check out the debt consolidation loan avenue before declaring bankruptcy.

Such a loan clubs all your debts together into a single repayment option. In turn, reducing the interest rates and giving you complete control of your finances.

To consolidate your debt, you can look at different strategies like credit card balance transfers, consolidation loans, etc.

Benefits that make debt consolidation better than bankruptcy

What happens when you cannot repay your debt? Ideally, your interest rate increases and the financers reach out to you for updates. If you fail to present the promised amount, this situation might be too much.

That is when you might think about declaring bankruptcy. However, before taking that drastic step, you should consider debt consolidation as an option.

Here are the benefits that make it better than bankruptcy:

  • Helps turn multiple debts into one
  • Reduces and lowers the interest rate
  • Improves your overall credit score
  • You can pay off your debt faster

These ensure that the entire debt situation gets less stressful over the months. Now that you know about the possible benefits, you must choose a strategy.

How to consolidate your debt?

The Australian debt consolidation avenue is vast. Therefore, giving you multiple options for the same. The strategies involved in this process are:

  • Debt settlements
  • Credit card balance transfers
  • Debt consolidation loan
  • Home equity or refinancing loan
  • Personal loans
  • Credit counselling

Primary consolidation steps would help consolidate your debts into one single repayment option.

Irrespective of the step you choose, you will quickly refinance your debts and slowly emerge debt-free. In most cases, you will require the assistance of an agency specialising in debt counselling or management.

However, if these strategies are not helpful, it is time for you to declare bankruptcy. Even though choosing this option can get painstaking, it would eventually give your finances a fresh start.

How to manage debt before choosing the consolidation avenue?

There might be instances when you would rather not choose either of these options. It would help if you considered making a debt management plan or hiring an agency.

Even though it is hard, these steps would help you understand where to begin:

  • Identify your debts
  • Sort them into categories
  • Sit down and analyse your overall expenses
  • Compare the expenses with your income
  • Differentiate between wants and needs

Once you have determined the kind of debt you are in, you can quickly identify the shortcomings. Doing so will eventually lead you toward a strategic plan to eradicate such personal debts forever.

Are you ready to ask for help and take action based on your lifestyle? 

The step before you decide to declare bankruptcy is debt consolidation. Choosing these would give you access to benefits like simple payment schedules and changes in spending habits. Moreover, the Australian government has put forward initiatives to help the people deal with debt.

After understanding the benefits and tips, you are now ready to choose from the types of consolidation strategies. The best ones include credit card balance transfers and a debt consolidation loan.

Irrespective of what you choose, this avenue will give you control over your finances and make your life stress-free.

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