A debt consolidation loan is a great way to get out of debt and pay off liabilities that give us no peace. A few, or even a dozen annoying installments turns into one, usually one that we are able to repay without major sacrifices. To be able to take advantage of consolidation, all you have to do is apply for it at your chosen bank and, after a positive credit decision, enjoy fewer monthly liabilities. Sometimes, however, the decision to consolidate your debts is too late. The first financial problems and the first unpaid installments are already appearing. How to deal with this situation? Does a debt consolidation loan exist at all?
A consolidation loan – it’s always harder on your own
If we have episodes of unpaid installments and arrears in debtors’ registers, especially those exceeding 30 days, there will certainly be problems on the way to consolidation. Banks look unfavorably at those who have delayed payments and loans then, rather reluctantly – and in extreme cases they do not grant them at all. However, we should remember that seeking help from several different banks and submitting subsequent loan applications is not a good solution. The more requests for credit and refusals, the more distant the consolidation loan for those in debt. That is why it is worth turning to someone who can help us in this matter and talk to banks for us. A good credit advisor certainly knows which banks want to cooperate with indebted clients and which do not. In addition, it is able to negotiate credit terms that we would not be able to obtain ourselves, and also knows how to manage our applications so as not to compromise our creditworthiness.
It would seem that if one bank refuses to grant us a loan, it is worth asking the next one and look until it works. However, we must remember that each bank sends a request to the Credit Information Bureau during the processing of our application. It has information about our obligations and how we pay them back.
The more such queries about us are sent, the worse. Subsequent banks will receive information that a given client has not received credit from several institutions and has been diligently seeking financing, which may indicate that his financial situation is not good and that he may not be a desirable client. With the help of a good credit advisor, we are able to avoid this situation, so if you dream of a consolidation loan for those in debt, it’s not worth acting on your own.
Consolidation instead of problems
If the first problems with repayment have already appeared, this is the best time to start working. What can happen if we don’t try to get help? The unpaid installments will increase, and the interest and debt collection costs of banks will increase with them. After several unpaid installments in a row, we can expect the loan agreement to be terminated and creditors demanded to pay the whole amount once. If we do not comply with this – the bank will go to court, obtain a payment order, and a bailiff’s seizure will appear on our account.
Then we will not only have to pay back the entire capital of loans and interest, but we will also bear the costs of court and debt enforcement proceedings. They depend on how high our debt is. In such a situation, we certainly will not save, but only worsen our situation, and at the same time seriously damage our creditworthiness. Our unpaid debts and arrears will be visible in our history for several years after the repayment is due. Of course, this is the worst possible scenario, but sure if we don’t take any action.
A debt consolidation loan means, above all, that all loans we have in various institutions will be repaid immediately. Their demands will be met and we will no longer have to explain our problems to several different banks. Instead, we will be holders of a new loan that has absorbed several others. The installments of consolidation loans are usually tailored to the clients’ needs so that they do not exceed their financial capabilities. Therefore, more money from pay remains in our pocket, and we only lose worries about unpaid liabilities.