Debt consolidations: conditions and advantages

One way to get rid of debt in a good way is to consolidate (merge) debts. With debt consolidation, all debts are placed in one new loan. This can then be paid off in a controlled manner. Such a loan is called consolidation loan.

Debts are not waived for debt consolidation. All debts must be paid in full. Only the urgent nature of the debts lapses. And with that the growth of reminder, reminder and bailiff costs. With debt consolidation, tht costs of arrears and debts are kept under control, making actual repayment possible again.

Debt consolidation can be a very good solution, but a number of conditions must be met. You can read which conditions are on the ‘ Conditions ‘ page. If these conditions can not be met, debt consolidation and the application for a consolidation loan are useless. In that case it is only about moving debt. The solution must then be sought in debt rescheduling processes.

Debt Consolidation

If the conditions can be met, a consolidation loan can offer a solution. A consolidation loan is a loan in which other loans, arrears and debts are settled. What exactly is a consolidation loan you can read on the page: What is a consolidation loan? With a financier you can see what amount is necessary and a payment plan can be drawn up. It is also possible to record the costs of the loan.

Many advantages

Although the consolidation loan is regularly applied in business, this is rare in the private world. Unfortunately, the consolidation loan is often still seen as a major risk. Because of prejudices about people with arrears and debts, many financiers do not jump to offer such loans. The regulations by the Netherlands Authority for the Financial Markets (AFM) and De Nederlandse Bank (DNB) do not make it easy to provide these loans. Too bad, because there are many advantages associated with this loan form.

For the creditors:

  • The bills are paid. There is no more uncertainty about whether payment will follow. The risk of a debt rescheduling process, in which parts of the receivables have to be written off, is prevented.
  • The money is readily available. There is no need for months to wait until the money is in. The money can quickly be used again for the company.

For the borrower:

  • Towering collection costs are prevented.
  • There is overview and peace, because the jumble of memories and reminders stops.
  • Financial space is created because ad-hoc all sorts of bills do not have to be paid at once.

For the financier:

  • A relationship of trust arises between the money lender and the financier, which can be exploited extra in the future.
  • The money lender is extra motivated to ensure timely payment.
  • Borrowing money, costs money! This also applies to a consolidation loan. The money lender can therefore earn money with this loan. 

For the economy:

  • The money lender creates room to participate in the economy in a ‘normal’ way. Additional purchases can be made on a limited scale, which can stimulate the economy as a whole.
  • The economic damage due to the amortization of receivables by companies is limited.
  • People with a financially quiet background are more productive, healthier and better motivated. 

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