DEBT CONSOLIDATION AND INFORMAL ARRANGEMENTS
There are many decisions you
must consider in circumstances of monetary struggle.
Published by Paragon Legal Services on November 15th, 2021.
å Debt
Consolidation
Debt consolidation refers to amalgamating all of your current
and outstanding loans into one. This entails you getting further credit to clear your debts and combine
the payments into one monthly amount to make the
repayments more affordable. A debtor can
apply for one new loan which covers the total amount owing all of the existing
creditors. This amount from the debt consolidation loan is used to pay off existing
creditors. The debtor will now have only one
payment to make to the new financier which is usually a financial institution
such as a bank.
If debt consolidation is one of the options you are
considering, then you should contact a qualified professional to
give you advice on the different plans which may
be available to you.
The most common debts you can consolidate are credit
card balances and other consumer loans, including lines of credit. There are
advantages and disadvantages to this option.
Advantages:
Ø
one monthly payment to one lender
who would have paid off all previous or existing debts
Ø
the new interest rate is lower than
your current rate
Ø
the debt can be repaid in a
specific time frame
Ø
new repayment amount is more
affordable
Disadvantages:
Ø
you must be able to qualify for the
new loan with your financier
Ø
you must be able to comfortably make
the repayment
Ø
you may have to provide collateral in
the event you default on your payments such as a vehicle, a mortgage on your
home, cash or capital investments
We are committed to giving you the exceptional customer service you
deserve. Arrange a consultation by
contacting our specialist who will give you all the
information you need.
å Informal
Arrangement
If you cannot obtain financing for a debt consolidation loan,
you may be able to make an informal payment
arrangement directly with your creditors.
They agree to let you pay a lesser amount, or make your payments over a longer
period. There is no minimum or maximum amount to offer an informal arrangement to
your creditors. This means you offer repayments
based on a comparable dispersal of your left-over monthly income. You may ask
for interests and charges to be frozen on your accounts.
This alternative is generally used for commercial
debts, unsecured personal loans, credit cards, overdrafts, et cetera. There is
no determined time limit for an informal arrangement. It is usually based on
the proposition you make to your creditors in conjunction with the level of
your debt. You must maintain your monthly repayments in
an informal arrangement until your debts are paid in full,
or until you can repay your full contractual repayments again.
You can talk to our expert at Paragon Legal
Services and let us help you take your first step towards a
debt-free future today!
