What companies should I be talking to about bad credit debt consolidation?
When you have good credit, getting approved for a debt consolidation loan is not very difficult. If things are becoming tight it is a better option to apply for a debt consolidation loan while you still have a good credit rating in order to lower your repayments and maintain a more competitive interest rate, obtaining one after your credit rating has become impaired is more difficult and definitely more costly.
Individuals with good credit can usually secure the lower interest rate for the fact that they have good credit. They may also have the option of AAA refinancing, which allows them to refinance their home and receive a difference in the equity via cash to use to consolidate their debts. The payment is then included with their mortgage payment at a lower interest rate (usually very similar or the same as the home loan rate)
For those with bad credit you only really have two options.
1. To obtain a non conforming mortgage to refinance your high interest debts into your mortgage. This option is usually only available if you have a significant amount of equity in your home (e.g. 30% +)
2. For those without equity in their home, there are companies offering to negotiate your debt with your creditors with a financial product called a debt agreement. These debt agreements do come with a price, though, and you are unable to acquire any new credit while this process is ongoing. This is sometimes referred to as an informal arrangement. However, some debt management companies may require that you are in a minimum amount of debt. For example, they may only handle your case if you have over $10,000 in debt.
 A debt agreement is for those who have not used a debt agreement within the last 10 years and who have not filed bankruptcy in the past 10 years. There is also a minimum income of $61,875.41 per year after taxes are taken. Unsecured debts must also not exceed $82,500.60. You also have to be insolvent, which means it can be proven that you are unable to pay your debts with your regular income. There is also a variation on a debt agreement called a Part X personal insolvency agreement, which can be used by those individuals with a higher debt level and/or income level.
So aside from having to file bankruptcy, you do have options. Even if your credit is bad, no one wants you to be in debt if you’re willing to do something about it, so you can contact a debt management or debt consolidation company that will negotiate better rates with your creditors so that you are able to pay off your debts and start on the road to repairing your credit.
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