Bad Debt Consolidation

All of us have debts in some form or another, whether it is a bank overdraft or on a credit or store card. Bad debt consolidation is only necessary when the debt becomes unmanageable. This may happen for a number of reasons; you owe money to a number of companies and are having to juggle all the repayments, you are being hassled by the companies to whom you owe money or you are finding that the interest you are being charged is so high, that you never get around to paying off the actual money you owe.

If any of these sound like your situation, you should consider bad debt consolidation, which is simply a loan that you take out to pay off all or part of your debt. You should only consider bad debt consolidation if you are able to get a loan with a considerably lower interest rate than the debts you have already, and this should not be hard if you have credit cards debt, where the average rate is 17.9%. It sounds obvious, but don't forget that you are exchanging one debt for another, and as such you are not out of the woods quite yet. Ensure that you make your monthly repayments for your bad debt consolidation loan on time each month, to ensure that this new debt does not become a problem. Also, remove all temptation to fall back into debt by closing the store card accounts and cutting up credit cards once you have paid them off.

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Why would I need Bad Debt Consolidation?

• 'Bad debt' is debt that has gotten out of control, to the extent that it is causing you stress and damaging your credit rating.
• You would find bad debt consolidation useful if the interest you are paying on your current debt makes it difficult to clear the debt, or if the debt is becoming out of hand in any other way.
• You should not use bad debt consolidation if you feel there is a chance you will not be able to meet the repayments on this new loan.  If this is the case, a debt management plan may be more suitable for your situation.