19 Sep Can You Get Consolidation Loans for Accounts in Arrears?
Have you ever wondered if you can get consolidation loans for accounts in arrears? The answer is a resounding yes, you can! Consolidation loans were created to help those with debt consolidate all debts into a single monthly payment. This means you can pay off all accounts in arrears and start with a fresh clean slate. Debt Refinance’s clean slate offers longer repayment periods, lower personal loan interest, savings on admin fees, and a team of financial experts who have your back. Consolidation loans are the ultimate reset button.
Having an account in arrears may affect the terms of your consolidation loan. Some companies may be hesitant to give you a consolidation loan if you have a really low credit score or judgments against your name. They might require a higher income, more interest, or advise you to pursue other debt help systems.
Let’s discuss whether you can get a consolidation loan when your accounts are in arrears, whether it can protect you from the consequences of having an account in arrears, and why or why not consolidation loans might be the solution you’re looking for.
Without further adieu, here’s a guide to whether you can get debt consolidation loans for accounts in arrears.
Yes, You Can Get Debt Refinancing for Accounts in Arrears
It’s possible to get debt refinancing for accounts in arrears, but depending on the severity of your arrears, it could have hefty downsides attached. Let’s discuss why.
Why Arrears Affect Your Loan Eligibility
When you enter into a loan agreement, you agree to pay back the loan on certain days for a certain period. If you miss a payment or make a partial instalment, your account goes into arrears. When you go into arrears, your lender or bank reports this to the credit bureaux, which brings down your credit score. In turn, this could affect your ability to take out new credit, like consolidation loans (a sort of personal loan).
Accounts in Arrears and Consolidation Loans
You probably want to take out a consolidation loan to pay off your accounts in arrears at once. Getting a consolidation loan is possible, but it might come with stringent conditions:
Higher Interest
A bad credit score and derogatory marks could mean that consolidation loan companies and banks will impose a higher interest rate on your loan. This is a sort of insurance policy. If you default on the loan, the banks or consolidation loan firms will still have made some sort of money on the interest you paid.
Higher Income
You might only be able to consolidate all your debts into a single loan if you have a high enough income. This is to ensure that you can afford the loan repayments.
Can Consolidation Loans Protect You from the Consequences of Accounts in Arrears?
This depends on whether you received a formal letter of demand (S129). When you receive an S129, you are notified that you have 10 days to pay the account or find alternative means to manage your debt, like debt review. The approval process for consolidation loans may take more than 10 days because of the admin and affordability assessment process, especially for high-volume companies.
If you haven’t received an S129, then you could look at a consolidation loan. Note that you have 20 business days from the date your account falls into arrears until you receive an S129.
Contact Debt Refinance to find out whether a consolidation loan is a good solution to your accounts in arrears. One of our friendly team members will work with you to assess your circumstances and advise whether debt review could be a safer option.