Being stuck in debt is a vicious cycle that can spiral out of control. Indeed, being in debt is often a slippery slope due to the interest and late fees that start accruing on overdue payments, and once you start missing a few payments, your financial position can quickly go downhill – as can your credit history. It’s therefore understandable that people in debt wish to get out of debt but sometimes it can feel so emotionally, and practically, overwhelming that people don’t know where to start.
A good starting point is the money advice service that offers free and impartial advice on how to get out of debt. This article looks at why consolidating your debt might be a good strategy to reduce your stress, rebuild your credit rating and get out of debt.
For most people, having debt in itself, isn’t the thing that is stressful – it’s the debt collection activities that happen when people fall behind, and the constant worry about what could happen next — it’s the phone calls, the threat of a ‘home visit’, the threat of court action, and even the prospect of bailiffs coming to remove personal items from your home.
Being pursued for debt can be an extremely stressful situation, and often times when people are in a serious financial position they are pursued by multiple creditors with multiple streams of debt collection activity; which compounds and spirals to such an extent many choose to then bury their heads in the sand by not opening letters, avoiding phone calls, and detaching from the situation. However, when it comes to debt avoidance really isn’t the best strategy, it can provide temporary relief but it isn’t a long-term solution.
However, the prospect of consolidating your debt into one larger loan in order to pay off the smaller bits of debt offers immediate and permanent relief from the multiple creditors banging at your door, repairs your credit rating in the sense that you are no longer making several missed payments each month – and presuming you keep on top of the payments for the consolidation loan, it will actually start to rebuild your credit score.
Indeed, one the best ways to reduce your stress is to consolidate your existing debt into one lump sum. The challenge can be getting approved for another loan, when you are already in a financial pickle – which is where products such as Jubilee secured loans can be incredibly helpful, as a viable way to obtain a consolidation loan even if your credit history has been damaged. That said, it does require security in the sense of property to obtain the loan so is only really suitable for homeowners.
The core benefits of consolidating your debt, aside from the obvious financial benefits of avoiding late charges being applied, is that you are now dealing with one creditor rather than several – and rather than having a number of debts with late payments (which can seriously affect your credit score) you now have one debt with payments that are being made on time.
In short, a debt consolidation loan is one of the best ways to get back on track; as long as you are in the financial position to keep up with the repayments it can give you some breathing room to get back on your feet.