Debt Information Explained
Debt information explained When it comes to debt, there is a huge number of myths and misconceptions circulating the internet. We explain the myths
It is vital to know the truth about debt because the wrong information could prevent you from dealing with it appropriately. In this blog, we’ve debunked three common myths about debt.
If you have a large amount of debt, bankruptcy is your only option
Bankruptcy should only be a last resort after you have considered all of the alternatives for clearing your debt. A debt management plan or debt consolidation loans can help you to combine your loans into one to lower your monthly interest rate and simplify your monthly bills to make it easier for you to pay off your debt. A debt consolidation loan can reduce the number of creditors that you owe money to and boost your credit rating so that you can budget for the future more easily.
It’s OK to make minimum payments on a debt
Making minimum payments on debt is only OK if you want to remain in debt for longer than required and pay higher interest rates. Making minimum payments can prevent you from having to pay late fees but it is far better to pay your debts in full each month, or, at the very least, increase your monthly payments to a figure slightly above the minimum. For example, if you have a credit card balance of £5,000 with a £100 minimum monthly payment at a 15% interest rate, it will take you approximately 24 years to completely pay it off and you will be charged a total of over £7,000 in interest. If, however, you increase the amount you pay monthly to £125, it will take you only five years to pay off the debt completely while saving you over £5,000 in interest.
If you marry, you will take on your partner’s debt
If you decide to get married, you will not be held responsible for any of the financial obligations or debt that your partner had before you were married. You are also not legally responsible for any credit or debt products they withdraw in their own name after you get married. If you decide to open up a joint bank account, mortgage or loan, however, you will both be responsible for the debts.
If you’re interested in taking out a debt consolidation loan with a reputable provider, get in touch with our team at Debt Consolidation Loans today.