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Bad Credit Personal Loans

Bad credit personal loans can be a nightmare of spiralling debt, but with the help of professional debt consultants, it can become your path to financial freedom. Looking for bad debt personal loans or another solution to try to pay off old debts? Keep reading for more information about pro-consumer loan options for people with bad credit.

About Personal Loans for Bad Credit

In Australia, companies use credit reports to assess an individual’s ability to pay back what they borrow. The term ‘default’ is applied when an overdue debt which has not been paid. Lenders are typically reluctant to offer bad credit personal loans to consumers with bad credit scores. However, 2015 research suggests that 71 per cent of people have never bothered to check their score.

In simple terms, a credit score predicts the likelihood of default over the next 12 months. Scores range from 0 to 1200.  In 2015 the average score was 771, according to the third annual Equifax Australian Credit Scorecard. Scores over 833 are considered Excellent; scores below 622 suggest that the risk of a default is high.

If you have ever missed a credit card or loan payment, your credit score will have been damaged. Getting a loan with a bad credit score is difficult with legitimate lenders; others might offer ‘too good to be true’ loans with the lure of fast cash-in-hand – at extremely high interest rates.

Swimming with the Credit Sharks

When consumers with bad credit scores struggle with debt, many assume that the only solution is to take out bad credit personal loans to cover their debts. In their haste to get cash in their hands, they may neglect to read the fine print on the bad debt personal loans contract and find themselves locked into a deal at extremely high rates of interest.

The solution to getting out of debt is never to add more to your debt –  the math simply doesn’t work. Instead, think about your spending habits: what can you do differently to ensure a greater monthly cash flow? In addition, there is a myriad of other debt-reduction strategies that our qualified debt consultants can help with.

As one of Australia’s leading Debt Agreement administrators, we help people break out of the debt cycle using various methods like Part 9 Debt Agreements, Part 10 Insolvency Agreements and Bankruptcy solutions.

Debt Agreements to Solve your Problems

Part X Agreements have been a part of the Bankruptcy Law for decades. Part IX started in 1996.

For those who can’t pay their debts and wish to protect an asset from creditors, a Part IX Debt Agreement is a proposal for creditors to consider, that outlines how you plan to pay off outstanding debts.

If your creditors accept the proposal, you will enter a Debt Agreement, either a part 9 debt agreement or a part 10, depending on the circumstances. This will be listed on your credit report for five years. Legally, it becomes a binding contract when your creditors agree to accept the terms of your Debt Agreement proposal.

Stop Living for Today

Bad debt personal loans favour lenders via high interest rates. Part 9 debt agreement and Part 10 arrangements favour consumers by freezing the interest on debts, and also reducing them to more manageable monthly payments.

However, making a change in the way you pay off your debts may not be enough. It’s important to also beef up your discipline when it comes to money. Keep track of spending, set a budget and stick to it. The harsh reality is that people find themselves in debt because of careless habits.

Therefore, if you’re struggling with debt and have bad credit, taking out a loan to deal with your debts is like fixing a computer with a hammer.

Instead, consider talking to one of our consultants. They will help you determine whether a Part 9 or Part 10 arrangement might be a better way out of debt for you. They will also work with you to curb spending habits and keep a tight budget, with a variety of tools.

In conclusion, getting a bad credit loan hastily to pay off debts can make your long-term financial situation much worse. On the other hand, taking a step back, thinking rationally and working with experts can help put your life and finances back on track.