The Alternatives to a Debt Consolidation Loan: Don’t Want to Consolidate Debt Again. What About Debt Solutions?

When multiple personal debts become overwhelming, a debt consolidation loan appears to provide the answer. Credit card debt, overdrafts, hire purchase agreements and small loans can all be combined and a single, affordable monthly repayment made. However, this may not necessarily be the case.

Why a Debt Solution Could Be Better than a Debt Consolidation Loan

  • When a consumer consolidates debt, cards and overdrafts are left active and are used again.
  • Turning unsecured into secured debt provides a creditor with collateral.
  • The repayment period is extended which means more interest is paid over the loans duration.
  • Additional money is borrowed.
  • Home equity is utilised and this can make refinancing or moving home more difficult.
  • Missed or late payments may mean that a higher rate of APR is charged.

What Debt Solutions Are Available?

Should someone with personal debts have missed or made late payments on an existing or past credit agreement, these will show on a credit report for a period of six years. This not only makes borrowing more difficult, it makes it more expensive. A debt solution, such as a Debt Relief Order (DRO) or Debt Management Plan (DMP) are helpful for negotiating modest levels of debt up to £15,000. An Individual Voluntary Arrangement (IVA) or choosing to declare bankruptcy may be the answer to serious debts.

Debt Management Plans

When a consumer has bad credit, a debt consolidation loan will prove expensive. A Debt Management Plan (DMP) is a debt solution that allows someone to manage personal debts without borrowing any additional money. It is an informal agreement with creditors to make a monthly repayment to an intermediary who will distribute this to creditors. It is often possible to freeze interest and further charges.

Debt Relief Order (DRO)

Rather than choosing to consolidate debt, a Debt Relief Order (DRO) seeks to free a consumer from financial difficulties. It is a debt solution that allows someone to write-off up to £15,000 of personal debt. In order to be eligible, a consumer must have a disposable income of under £50 and assets of less than £300. An intermediary, a qualified debt counselor will help wit general advice and paperwork.

Individual Voluntary Arrangement (IVA)

Homeowners traditionally have the option of taking out a debt consolidation loan or an Individual Voluntary Arrangement (IVA) when personal debts are greater than £15,000. An IVA is not a loan or a way to consolidate debt, it is a debt solution that can write-off up to 75% of all money owed. Once 60 pre-agreed monthly payments have been made and any remaining liabilities are written-off. Creditors will vote on whether to accept an IVA; 75%, in terms of value, must vote in its favour.

Declare Bankruptcy

The majority of consumers who choose to declare bankruptcy cannot get a debt consolidation loan due to a bad credit history. Whilst homeowners tend to consolidate debt or opt for an Individual Voluntary Arrangement, filing for bankruptcy helps those who have no assets to protect. It is possible to write-off debt and be fully discharged in just 12 months. The insolvency will result in the loss of any valuable assets, can affect professional status and it will be made public in a local newspaper.

A debt consolidation loan is useful for homeowners with a good record of prompt payments. However, those who do have a bad credit history are likely to find that the only way they can consolidate debt is through a secured loan. Turning unsecured into secured debt is rarely a good option when a debt solution, such as a Debt Management Plan or Individual Voluntary Arrangement, could help someone overcome financial difficulties without the need for further borrowing.

Express Loans: Guaranteed Payday Loans for Bad Credit Scores

Fast or express loans are designed to help customers out of a short term financial hole, such as repairing a broken car so they can get to work. The bulk of customers have already been declined by the banks so guaranteed payday loans for bad credit are often the last port of call. Provided that the eligibility criteria are complied with, all that the customer needs to do is provide the payday lender with a postdated check for the principal and any interest that will accrue. The advance won’t be provided in cash, but will instead be transferred directly to the customer’s checking account.

What are Guaranteed Payday Loans for Bad Credit Scores?

An unsecured loan for people with bad credit from a payday lender like is essentially a guaranteed 24-hour loan to help deal with a genuine financial emergency. It is completely unsecured so no collateral – a house, car or gold – is needed to secure it. This means that the lender has to factor-in the likelihood of default when determining the rate of interest customers face. Interest rates are very high so a payday cash advance loan is not suitable for the consolidation of debt or long-term borrowing. In fact, most unsecured tenant loans are available for just 30 days.

Who Can Qualify for an Express Loan from a Payday Lender?

It is possible to get a loan with bad credit because there are no credit checks at any stage of the application process. If payday loan lenders used the credit scoring process that the banks do, they’d destroy their business. Instead, lenders focus on making sure that the applicant is who he claims to be and that the repayment of the money is affordable. A guaranteed payday loan for bad credit isn’t suitable for people in-between jobs because there is a full-time work requirement. There are loans for unemployed people available on slightly revised terms.

How Much Does it Cost to Get a Loan with Bad Credit?

As already alluded to, default rates are high on guaranteed payday loans for bad credit scores. The cost of an instant loan for $1500 is $375. This means that the customer will be expected to repay $1875 when they are paid at the end of the month. It is important to carefully consider how the money will be repaid. Unless the borrower is expecting a bonus, over-time payment, inheritance etc, an unsecured tenant loan could exacerbate financial difficulties.

Defaulting on Instant Loans for Bad Credit Scores

Defaulting on an express loan means that interest and charges will continue to accrue. Uncollectible debts are also likely to be sold on to collection agencies who will pursue the borrower for the full balance. Unsecured loans for people with bad credit can be tackled with a debt free solution, such as a debt management plan, debt settlement program or filing for chapter 7 bankruptcy. A credit counseling service may be able to help, but it is better to deal with an issue as soon as it becomes apparent. Borrowing money without a realistic prospect of being able to repay it is inadvisable as it simply delays the inevitable.

Free Credit Report Online

Tips Included

They say you can tell a lot about a person by what is in their credit report and I was curious as to what was in mine. I had worked myself to the bone after I turned eighteen to try and build my credit up and what I later found out, not only shocked me but had also shocked the cops.

I had often heard about ways to get a free credit report online but had never tried it before until I learned that my electric was turned on at a different address, one that I had never lived at before.

I must have been around the age of 21 when I tried to have my electric turned on at my new house. The electric company told me that I had a rather large bill that needed to be taken care of. I told them that they must have the wrong person because I had never had service with them before. I sweet talked my way into getting the address where the service was on at and the lady told me about a way that I could obtain a free credit report online.

The name of the company was easy to remember. It was so easy to remember that I went home and looked the site up. After entering some simple information like my current address, social security number, my previous address, employer, and a little bit of other information, I was able to print out and look over my free credit report online. This wasn’t just any free credit report company; they allowed you to obtain your free credit report online from three of the major credit reporting agencies.

After reviewing over my credit report, I noticed that there were a lot of bills and other things that were there that I had not signed up for. I was in a mass hurry to get this fixed but didn’t know where to begin so I looked at the website,, and found a link to where you could object to any negative readings that you had obtained from your free credit report online service.

I simply filled out the information and received a phone call from them within the next twenty-four hours to let me know that they received the information and was going to investigate it. They were also nice enough to let me know what my next steps should be as far as notifying the police and how to get my credit back in order.

I had also received information on how to be alerted anytime that something in my credit report changes. They allow you to try out their alert service for a month before being charge $12. I tried the free trial and loved it.

Tips to help you obtain a free credit report online:

If you really want to know what your credit report is without having to pay for it, anytime that you fill out an application for a loan that is denied, you are able to receive a free credit report and you can look up a free credit report online service like the one that I had mentioned before to receive yours free of charge.

Also, once a year you are allowed to receive a free credit report from all three major credit reporting agencies free of charge and you should mark this day down in your calendar and get a free credit report online.

Many companies will also allow you to have a free trial with their free credit report online services for a small period before being charged. Sign up for one of these companies and take advantage of the free credit report online just remember to cancel before the trial ends.