What is Credit Card Consolidation?

Credit card consolidation seems to be the most talked about term in the world of credit cards. It is true that credit cards have been very useful and convenient for us and we, in fact, treat the credit card as a necessity. However, with every good you have evil too. In the world of credit cards, ‘Credit card debt’ is that evil and ‘Credit card debt consolidation’ is often regarded as a method for treating credit card debt.

Credit card debt consolidation, in simple terms, is the process of consolidating debt, which you hold on various high APR credit cards onto just one low APR credit card. Thus, the main benefit of credit card debt consolidation is realized in terms of APR reduction. This is touted as the most important benefit from credit card debt consolidation.

However, credit card debt consolidation comes with few more benefits as well. Some of these credit card debt consolidation benefits are widely publicized by the credit card suppliers and some not so much.

Lower APR is the biggest benefit from credit card debt consolidation. Since credit card debt consolidation is used by credit card suppliers as a tool to attract consumers, they generally offer a 0% APR for a initial period of 6-9 months of you joining their credit card debt consolidation programme.

How Payday Loan Works?

You must have felt burdened by an unanticipated expense many times in your life such as a huge car repair bill or a medical bill. What is the best way to handle such an expense when you are already short on cash? Should you pay for it using your credit card and pay for it along with a huge interest. If you don’t have a credit card and have maxed out on all other sources of credit, the best option available before you is to get a payday loan.

What is Payday Loan?

Different people call payday loans by different names. It is often called as cash advance loan, a check advance loan, a post dated check loan or a deferred deposit loan. The Federal Trade Commission has given it the name costly cash. Irrespective of what it may be known as, payday loan is basically a loan advanced for a short term with a high interest rate.

Why to go for Payday Loans?

Payday loans have become extremely popular amongst people due to a large number of reasons. When a person is in immense need of cash, the small disadvantages associated with these payday loans become diminished. The wonderful benefits of payday loans include:

• No need to go through a stringent credit check due to which your loan application may be rejected.
• Payday loans can be applied for in person, on the Internet and even on the phone.
• It taken a maximum time of 30 minutes to apply and get approved for the loan.
• The amount of the loan is deposited directly into the bank account of the borrower.
• The process of getting payday loans is quite discreet
• The financial information provided to the lending company is not shared with anyone else. Thus, it is a secure process.

Due to all these advantages, the payday loans are the right way to go to in case of urgent needs. Just cover your requirements with the loan amount and pay back with your next pay check. That solves your problem!

Would an IVA be suitable for me?

IVAs (Individual Voluntary Arrangements) are a formal, legally binding debt solution – a form of insolvency. They are seen by many as a preferable alternative to bankruptcy (this is partly because an IVA is very unlikely to force the sale of your home, while bankruptcy is almost certain to).

If you can’t afford to repay your unsecured debts within a realistic amount of time, but can commit to making regular reduced monthly payments, then an IVA may be the right debt solution for you.

If you enter an IVA, you will usually make payments for 5 years. When the IVA comes to a successful conclusion, any remaining unsecured debt will be written off.

Please note, however, that an IVA can’t go ahead unless enough of the lenders who would be involved agree to the terms which you and your IP (Insolvency Practitioner) propose.

The differences
IVAs and bankruptcies are very different; the differences listed below are often seen as the most important ones:

An IVA usually lasts for 5 years. Bankruptcy usually lasts for 1 year – but payments may continue for a total of 3 years, and in rare cases, a ‘Bankruptcy Restriction Order’ may be arranged, which can last for 15 years.

An IVA may require you to release some of the equity you have in your home; it is highly unlikely to force the sale of your home. On the other hand, bankruptcy is highly likely to force the sale of your home.

IVAs won’t be published, although they will be shown in the ‘Individual Insolvency Register’ (which is available to the public). In contrast, bankruptcies will be published in newspapers.

If you enter an IVA, certain companies may not hire you. If you have been declared bankrupt, you won’t be allowed to work as a local government councillor, for example, or a company director.

The similarities
IVAs and bankruptcies do, however, have their similarities:

They are both forms of insolvency.

They will both stay on your credit report for 6 years, which could make further credit harder and/or more expensive to obtain during that time.

They both allow you to write off the portion of your debt that you can’t afford to repay.

They both restrict the amount of money you are allowed to borrow while they are in progress.

They can’t write off certain types of debt – for example, secured debts or court fines.

To find out if an IVA would be suitable for you, you should contact a professional debt adviser.