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How To Consolidate Bad Debt

by Jim ONeil on February 25, 2011

in Personal Finance Tips

Debt is not something most of us wish to have but once we do have it, we need to deal with it. As time passes, the debt mounts, so it is important to immediately address the issue. There are loans available that assist with consolidating debt and these remove the need to deal with of different payment due dates and interest rates.

Many people find themselves in the situation of needing to pay multiple credit card or loan bills simultaneously. In some cases, their salary and monthly cash flow cannot cover all of these payments. Credit card interest rates then mount and loans head toward default. To avoid this situation, which can become much worse, individuals should consolidate their debt.

Regular and payday loans allow people to borrow cash designed to consolidate debt. They can use one loan to pay off multiple debts and are left with just one bill to pay each month. With one payment and a single interest rate, individuals will no longer be juggling funds to cover the debt payment every month. This process leads to better cash flow management.

Credit cards usually have the highest interest rates, so these should be paid off first. If the loan amount will not cover all credit card balances, use the money to pay off the credit cards with the highest

rates of interest. Focus on using remaining income each month to get the credit card balances down to zero.

Consolidating debt creates a more manageable financial situation. Using payday or regular loans allows people to avoid the additional fees and interest carried by debt. Before long, these individuals will be debt-free and on their way to creating a positive financial situation. The hope is that valuable lessons are learned from the situation so individuals will not find themselves facing debt in the future.


If it sounds too good to be real then it probably is. There have been tales in the media about companies who offer miraculous fixes, take a big deposit, then fail to deliver, sometimes with a sketchy reason, sometimes with no reason at all. They are making millions of pounds from desperate debtors and the government is looking at ways of banning them for good.

I reckon there are three ways to get rid of a debt (legally).

1) Pay it off:)
2) An IVA
3) Bankruptcy.

No. 1 of course is the best solution, but often the trickiest. No. 2 can work but can result in wasted fees as if it fails, which many often do, as you are quickly back to square one. No. 3 is ideal if you have little or no assets such as your own house and/or a luxury car.
There is no quick fix peeps!

Tarun G

Most Creditors and even collection agencies are pretty workable when it comes to paying of debt. Yes you can negotiate a settlement with them ( part of the settlement being complete removal off your credit reports). But make sure that you get it in writing. They mostly want money, they don't get money by reporting you. I have successfully done this 3 times.


You cannot close a line of credit until it has been repaid in full, and yes it will show up during your credit check through the bank. However, you can include the cost of the line of credit into the mortgage to help pay it off, just be sure to tell the mortgage company that is part of the funds you are requesting. It could help make it easier for the mortgage application process.

Yvette B yvetteb

it is best to close any form of credit after you have paid it all.

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