People must always keep in mind that a debt consolidation loan does not eliminate debt. Whatever monies are borrowed have to be returned no matter what. The process of taking and handling a debt consolidation loan is a whole lot easier to handle as there is only one loan to keep track off. The good thing about this plan is that the person opting for this will gradually feel that they have less and less outstanding debt. Before going in for this choice it is mandatory that enough of homework is done in terms of options. There are reliable sources like local credit unions which give borrowers a fair deal. New banking relationships also work well. Reputable business companies may be interested in a buying out a loss making unit. Loans are very difficult to get when a person needs them the most. Keeping credit in good books will ensure that scores will be as high as possible.

Staying grounded to a debt management plan

Developing a debt management plan will help in identifying spending patterns and issues if any. Some people might find it a bit difficult to stick to this plan at the beginning but as time goes by and the individual realizes that he or she is actually getting to the point of being debt free, they feel rewarded and totally stress free. A starting point could be making a daily, weekly or a monthly budget. The next step would be making and recording all the income and expenditure in writing so that it can be ready reckoner. Paying off old debts especially the ones with high interest rates should be done on priority. Credit cards should not be charged until the existing balances are paid off in full.

Debtors can lodge a debt agreement if they are insolvent

A part ix debt agreement can be lodged by people who claim insolvency, have unsecured assets and debts and are in a position to pay the prescribed fee. Once a debt agreement is accepted, it will end only when all the payments and obligations are met. It could also end if the court orders for termination or the creditors terminate the same. When this type of agreement is accepted, it gives unsecured creditors to take over any assets that the debtor has placed as security. It is mandatory to understand that this type of agreement is a fixed debt consolidation with a fixed interest rate which helps in getting together all unsecured debts into one single regular payment which can be paid on a weekly, monthly or fortnightly basis.

Types of debts that get covered under debt agreement

Unsecured debts are the only ones which can be covered under a part ix debt agreement. Personal loans, childcare fees, credit cards, school fees and repossessed automobiles are a few examples of unsecured debts. Most often debt agreement are tailor made to suit an individual's financial institution. It can include lump sum payments, periodic payments or even payments made from the sale of a property.