Consolidation puts homes at risk
One advantage of personal loans for debt consolidators is that they're unsecured that is, your home is not at risk if you can't keep up repayments. In the worst-case scenario you could end up with your house being repossessed for what was once just a credit card debt.
Nicole Rich of the Consumer Action Law Centre says a lot of companies actually negotiate a Part IX debt agreement. Another problem is that some borrowers take out consolidation loans that they can't afford, under the premise of “convenience” instead of lower cost. “But if you're in genuine hardship, you should contact your creditors where you should be able to negotiate lower repayments.”
Katherine Lane, principal solicitor of the Consumer Credit Legal Centre in New South Wales, says the Government is making it difficult for people to negotiate their way out of hardship by proposing to mark their credit records if they get into debt trouble.
Source: Adelaide Advertiser