Take Your Pick - Debt Consolidation Or Bankruptcy
With so many people taking out loans and using credit cards to
buy things in the UK, debt problem has become a common sight.
Every year, a large number of people file for bankruptcy. Debt
problem arises when you are unable to meet your debt
obligations. In order to have a better standard of living,
people take out loans indiscriminately.
Many times, they are not even sure how they are going repay
their loans. They realize this only when they come very close to
insolvency. The problem becomes even more deadly when the
borrower finds it difficult to repay a secured loan. In this
case, he runs the risk of losing his property. Debt
consolidation does not liberate you from your debt obligations.
It merely makes it easier for you to pay your unpaid loan
balance and credit card dues. The main idea behind debt
consolidation is to replace all your debt obligations with a new
one. Lenders offer debt consolidation loans that can be
used to repay existing loans. The rate of interest on a debt
consolidation loan is lower than the rates on existing
loans. This gives the borrower some respite as the immediate
threat to his solvency assuages. Moreover, it becomes easier for
the borrower to manage a single loan instead of keeping a track
of multiple loans.
You may face severe consequences if you do not consolidate your
loans which you are not being able to repay. You may lose your
property if your loan is secured against the property. In case
of an unsecured loan also, the lender may initiate legal
proceedings against you. You may even be declared bankrupt. You
will not be able to get a fresh loan for many years once you are
declared bankrupt. There are many other problems that people
with bankruptcy have to face. Therefore, you must go for a debt
consolidation loan instead of filing for bankruptcy.
Debt
consolidation loans can be secured or unsecured. Secured
loan is more suitable for the purpose of debt consolidation
since it carries a low rate of interest. Alternatively, you can
take out a personal debt consolidation loan. Personal loans are
usually unsecured, i.e. they do not require collateral. Whether
you take out a secured or an unsecured debt consolidation loan,
make sure that it helps you to become debt free.