
Get exclusive money-saving offers and guides
Straight to your inbox
Updated
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Debt is everywhere. Australian household debts are rising and along with personal insolvency declarations, one thing is clear: debt is lurking within most households.
If your debt levels are creeping up, there are a variety of debt solutions you can consider to help you regain control. This guide explains what they are and how to find the right one for you.
Debt solution companies work with people who have a large amount of debt to help them reclaim their lives and repay the money they owe. They offer to negotiate with creditors on your behalf, coordinate repayment plans and can help you file for bankruptcy if your financial situation necessitates it.
Many debt solution companies offer budgeting assistance or customised debt solutions in order to help you get out of debt fast. This option will help empower you when it comes to restructuring your finances.
A debt solution is usually offered by a specialist debt company. Some companies offer debt consolidation services, where they offer to repackage all of your debts into one loan.
Debt agreements are also available for people who are unable to pay off their debts but don’t want to declare bankruptcy. All of your debts are consolidated into one loan with this option as well.
Personal insolvency also involves debt consolidation but this option is only available to those with over $90,000 in unsecured debt.
Your last option is bankruptcy. It is often described as a “financial clean slate” but is not a decision to be taken lightly as the regulations around this are complex. However, all of your unsecured debt will be wiped clean with this option.
Debt solutions and bank debt consolidation loans might sound similar but they have one major difference. Debt solutions are designed for large amounts of unsecured debt across a variety of platforms. They should only be taken out as a last resort when unsecured personal loans aren’t an option for you.
With a debt consolidation loan from the bank, you don’t get your interest rate or your repayments frozen and it may be up to you to close your previous credit accounts after consolidating. You will also need to have good credit and look like a good prospective borrower to the bank, which is atypical for most clients carrying multiple debts.
Consider the services of a debt consolidation company for any of these reasons:
Comparing debt solution companies can be a bit confusing at times. However, there are some easy ways to find the one that meets your needs:
There are some risks that are associated with getting a debt solution. For example, you may have paid off your short-term debts, but not changed your long-term behaviour. This might lead you down a familiar path because debt consolidation unfortunately does not change your spending habits.
Also, depending on the debt relief option you choose, the solution can impact your credit history. For example, Part 9 Debt Agreements are a form of bankruptcy and are listed as such on your credit file.
You should also be mindful of the total cost of the debt consolidation solution you are considering. Ask about every fee you might be charged so that you get a good understanding of what it may end up costing.
There are a variety of ways for you to get out of debt. However, it’s always a good idea to examine your financial habits first before deciding to see a debt solutions agency.
Picture: Shutterstock
From costs and finance options to what materials you’ll need, learn about bathroom renovations in this comprehensive guide.
Find out what to include in a web developer resume and how a customisable template could help you land your dream job.
Earnd is a pay on demand service that lets you access a portion of your paycheque before payday without paying any fees or interest.
Learn more about how PayActiv's Earned Wage Access service can help you access up to $500 of your paycheque for a $5 fee charged fortnightly (only if you access your wage before payday).
Here's everything you need to know about HDMI 2.1
There’s no shortage of cooling options when camping, working or four-wheel driving, but what are the best portable fridge freezers in Australia?
Get out and explore Tropical North Queensland with our guide to campervan hire in Cairns.
Get out and explore the Top End with our guide to campervan hire in Darwin.
Steam mops are an effective way to clean your floors and other parts of your home. Find out how to compare models and choose the right one for you.
Our experts crunch the numbers to help you work out the best place to park your money: is it your mortgage or your super fund?