So you have a few debts, maybe a couple of defaults and you would like to have the problem go away. What better than a debt consolidation loan to help you in your predicament? Well when it comes to bad credit debt consolidations things are not what they appear to be.
If your credit history has some issues then a debt consolidation loan is only available if you can offer security. That would be an unencumbered motor vehicle or a house with equity. Unsecured loans for debt consolidation or any other purpose require the borrower to have a clean credit history and full financials.
There is no such thing as a low doc unsecured personal loan. These loans simply do not exist through any Australian lender. If you are a low doc borrower, without security there is no finance available.
People who are in financial hardship because of a loss of employment, family issues or illness can apply to a credit provider requesting special consideration due to their hardship. Under legislation lender have an obligation to either offer you a repayment holiday or some other special terms for a discrete period of time. This can be used by the applicant as an opportunity to catch up on outstanding debts or in some other way recover from financial problems.
What can you do if you have some bad credit, no assets and require long term assistance to consolidate debts? You may look into declaring bankruptcy, or entering a debt agreement with your unsecured creditors.
Debt agreements offer people with little or no assets an opportunity to reduce their unsecured debts and pay them out fully on agreed terms to creditors. If you enter a debt agreement with your creditors then you are protected by legislation from debt collectors chasing payments. There is no interest accrued on this outstanding debt for the duration of the agreement.
Debt agreements offer a solution to people who are insolvent and do not wish to declare bankruptcy. They are no a debt reduction strategy for people with a clean credit history who have the income to make debt repayments.
Your mortgage and your car loan are not included in a debt agreement and the payment on these needs to be kept up to date, despite a debt agreement. These are secured loans and the lender is entitled to repossess the security assets and sell them to recoup losses.