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Debt consolidation options post debt agreement

Dec 29, 2014 |

We regularly come across individuals who have only recently come out of a debt agreement and are already seeking debt consolidation assistance for their new debts. This is a serious concern. For many of us a debt agreement would indeed be a wake up call that something has gone terribly wrong.  We have overextended. This sometimes occurs due to no fault of our own. Life creates unexpected circumstances and debt problems emerge that can no longer be brought under control with a little budgeting or debt negotiation.

When this occurs for a second or a subsequent time one really needs to ask whether a lesson has been learned from the first debt agreement experience.

Should debt agreement come with formal education? We strongly believe that the answer is yes. It is not enough to help an individual get rid of their current debts we should also offer a compulsory budgeting and borrowing education that the individual needs to attend as part of their debt agreement. Doing so is likely to prevent more borrowers from falling prey to the same problems time and time again.

What are the debt consolidation options available to an individual who has only recently come out of a debt agreement?

Debt negotiation

The first and the easiest method of debt reduction is to simply contact your creditors and attempt to reach an informal agreement wheeby they will allow you to make smaller repayments towards your debt obligations. Where the problem has occured because of a temporary drop in income this can be a very effective solution.

Consolidate into a secured loan

Another effective debt consolidation option that is available to individuals discharged from a debt agreement is a secured consolidation loan. This is where yoru debts are consolidate into a secured loan such as your car loan or a home loan. Before proceeding with this solution it is best to confirm that you will in fact be financially better of after consoliation. The reason that thi is sometimes not the case is that borrowers with a debt agreement history will generally need to pay more for their loans and therefore a consolidated loan may still be too expensive to be worthwhile.

What about a new Debt Agreement or Bankruptcy?

It is not possible to go from one debt agreement into another. In fact legislation requires that you have not gone into a debt agreement for at leats 10 years previously before you can avail yourself of this solution again.

Bankruptcy works differently and you can in fact become bankrupt again shortly after being discharged from bankruptcy. Therefore if after being discharged from a debt agreement you have found yourself in the same problem once agin, the second time around you may find that bankruptcy is an option but a second debt agreement is not.

 

Posted in: debt help, debt relief

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