Bayport Blog

Don’t let debt feed your stress

You never thought you’d end up with more debt than you can handle. But you did, and now it’s time to make a plan. A debt consolidation loan might be the solution you need.

Drowning in debt is an extremely stressful position to be in. You worry all night, and live in fear all day. You don’t want to answer your phone in case it’s someone wanting money from you, and you wonder how long you have until your car, furniture or other belongings are confiscated. You can’t pay school fees and you don’t know how you are going to buy clothes for winter.

It is a desperate situation and your stress levels are through the roof. But there are debt solutions out there – people and products that can help you to get back on track. Let’s look at two of your options.

Debt consolidation loan

Taking one large, long-term loan to pay off all your smaller debts is called debt consolidation. If you consolidate your debts, you will have one monthly payment, rather than many. It makes it easier to keep track of your payments. And it can be cheaper if the consolidated loan has a lower interest rate than the combined rates on all the other loans. Your interest rate will be based on your credit score, income and other financial details.

When you go the debt consolidation loan route, negotiate with your other creditors (you can do it yourself or the consolidation loan provider can do so on your behalf). In return for settling your outstanding debt immediately, your creditors are likely to agree to a lower settlement amount. If this is the case, your consolidation loan can end up being smaller than the combined amounts of all the loans it settles.

As a result, your cash flow will improve immediately and, just as important, so will your health.

To find out more about debt consolidation loans and what your options are, visit https://www.bayportsa.com/products-services/personal-loans-online/

Debt counselling

Debt counselling is a legal process through which a debt counsellor helps you to manage your money. He or she negotiates new payment plans with your credit providers and handles payments to them on your behalf.

• Your monthly debt instalments are reduced to an affordable amount.
• Once your payment plan is made an order of court, your creditors cannot take legal action against you.
• Your creditors are likely to agree to lower interest rates because they have guarantees that your debt will be repaid.
• A single debit order will be deducted from you each month and the debt counsellor pays all your credit providers.

The disadvantages of debt counselling

• Because your monthly debt commitments are reduced, it can take longer to pay off all your debts, which means that you end up paying more.
• You cannot access more debt while you are under debt counselling.
• Debt counselling is not free. You have to give the counsellor a once-off payment, pay monthly debt review fees and, in some cases, legal fees and the fees of a payment distribution agent (PDA).

Getting into too much debt has severe consequences and it takes commitment, discipline and hard work to get yourself out of a debt trap. The good news is that it can be done, and that you don’t have to do it alone. Debt consolidation loans and debt counselling are two solutions available to you so that your debt levels no longer make your stress levels worse.