Another possible solution is to consolidate your debt.

This entails taking out a large personal loan that will enable you to pay off all of your smaller debts. This is not an option that should be taken lightly since it’s entirely possible that it could worsen your debt situation.

If you have more than three separate, unsecured debts and are struggling to manage them, then this could be a viable option however, do not consider it if you’re struggling to pay your long-term, secured debts. This is because you’ll simply be combining all your loans into one bigger loan and, should you be unable to make the repayment, you could lose everything.

Another reason not to consider this in such a case is that large loans usually carry lower interest rates and a consolidation loan may combine all the debts and then ultimately force you to pay a higher overall rate. Generally, your debts should be incurring excessive interest, penalties and fees for a debt consolidation loan to be of any benefit.

There are many service providers like ANZ Bank, ASB Bank and KIWI Bank that offer loan consolidation products and, it’s certainly better to approach these reputable companies when your financial wellbeing is at stake. Before opting for a debt consolidation loan you should ensure that you’ve exhausted all other options and have at least, received advice from an independent third party like a financial counsellor.

If the reason that you’re struggling to cope with your debt is that you’ve suddenly experienced a major blow to your income, perhaps from losing your job, you may be eligible to apply for a hardship provision with your creditors.

A hardship provision will practically force your creditors to assist you in minimising the affects which result from a loss of income and allow you to negotiate smaller minimum repayments, a grace period or a settlement agreement. Before going to such lengths it will be worth your time to simply contact each of your creditors and try to get them to extend a grace period, reduce the minimum repayments or, agree to receive a lump sum of money to completely write-off the debt.

A hardship provision is only valid under certain circumstances and, if you meet certain basic criteria but, if your creditors aren’t playing nice – it may be your only option and, one that you should take if it means that you can keep your head above water.

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