If you are struggling to pay your debts or are coming close to defaulting on a loan then we are here to help. First of all, take a deep breath, as it might not be as bad as you think. You can always try to negotiate with the creditor. While you can’t force a creditor to negotiate, many will. And before you worry about having to pay the ‘lump sum’ in one go, several different payment methods exist.
Keep track of your communications
Put your negotiations in writing and ensure you have a history of agreements between you and the creditor. And if at any point you need help to understand your options or negotiating with the creditor, don’t hesitate to reach out to a financial counsellor, a community legal centre or a legal aid lawyer.
And, if you believe you don’t owe the money or the contract has some unfair terms, you should get legal advice as soon as possible.
Tips for negotiating directly with your creditors
Preparation is key when it comes to approaching creditors. You might find the following negotiating tips helpful in concluding a full and final settlement with your creditors.
- If you summarise all your assets (apart from your furniture and car), would it show that you have no equity in your house and no other assets? If you have no assets at all, you are in a perfect negotiating position, as creditors can’t ask for money you don’t have.
- If you then summarise your net monthly income and your unavoidable monthly expenditures (such as rent, food, etc.), how much, if anything, is left over each month to offer to creditors? If you demonstrate there is little or nothing in the left, creditors are more likely to come to a negotiated settlement with you.
- If you have no assets and no surplus income and can find someone willing to lend you the money, you could try to explain to creditors that if you petition for bankruptcy, they would receive nothing at all. But, if they accepted the full and final settlement offer, they would at least recover a portion of it.
1-4 Unsecured creditors
Suppose you only have up to three or four unsecured creditors. In that case, it is often possible to negotiate a direct settlement with those creditors by explaining your position without resorting to a formal process such as petitioning for bankruptcy or proposing a voluntary arrangement.
More than 5 creditors
It’s more difficult to negotiate and come to a satisfactory settlement by direct negotiation when you have more than five creditors as each creditor might want something different (in terms of repayment). In this case, it might be better to seek insolvency advice to explore other options, including a debt relief order, bankruptcy, or an individual voluntary arrangement.
What does Debt consolidation mean?
It’s easy to feel overwhelmed when you have multiple loans. Ignoring the situation won’t make it go away. Missing repayments amplifies the problem and can reduce your options. Debt consolidation loans let you streamline messy debts with varying interest rates and scattered repayment schedules into one simple loan.
Once you’ve consolidated your debt you’re only dealing with a single creditor and repayment plan, meaning less pressure in your financial life. A huge positive of consolidating your debt under one loan with a lower interest rate is paying back less interest over time. Our experienced brokers can talk with you to discuss the best possible loan terms, taking your credit rating into account.
Voluntary Bankruptcy
Voluntary bankruptcy is suited to those who are insolvent with limited credit options. Once approved, a trustee will be appointed, who assesses financial status (debts, assets, and income), informs creditors, and can organise the sale of some of your assets for repayments. On the surface, it sounds like this relief from debt is good. Right? In the immediate sense, yes. But bankruptcy has repercussions that may impact various aspects of your life. Be aware you could be dealing with the aftermath of bankruptcy a few years down the track.
Commonly consolidated debt types
Consolidating your debt is when you roll every credit line into on loan, creating a repayment plan that suits your lifestyle needs. Ideally, you end up with more readily available cash flow in your daily life with a longer-term loan, a healthier credit rating once various debts have been dealt with, and less outlay overall. Credit card debt, personal loans, and car fiancé loans can be consolidated, as can various bills, from medical to utilities. You can even include tax debt. Our Perth debt management team will verify what debts qualify and help you implement a workable financial strategy. We also help with loan protection insurance, ensuring unexpected bumps in your life path won’t have an immediate adverse effect on you and your family. Consumer credit insurance is designed to provide financial support in times of need, covering your repayments.
The main takeaway?
Don’t be afraid to talk to your creditors. They want to solve your debt problem, so keep the communication lines open.
Can a personal loan help you get out of trouble?
Like anything, your loan should suit your personal situation and finances. If a debt consolidation loan will help you get out of trouble, it might be a viable option. A customised personal loan shouldn’t introduce unnecessary stress and pressure.
How can Yes Loans help?
A great car loan broker or personal loan broker wants you to access the cash you need and offer you a personal loan with minimal risk of default. If you want to talk about using a personal loan for debt consolidation, talk to the team at Yes Loans to avoid a long, drawn-out process.
Our team of fast finance specialists can help you decide which loan suits your personal circumstances and create a competitive, manageable repayment program.
We broker tailored fast fiancé loans based on informed assessments. So if you want a personal loan for a new car, speak to our car loan finance specialists today. Reach out to us.