How can we get out of debt?? Any advice?

[Starfish]

I was wondering if anyone had any adivce on getting out of debt??

DH and I have had a real bad run of luck recently in regards to finances, in that our income decreased majorly about 3 months ago. For some reason the Famitly Tax Office had been paying us at the wrong rate, so in about April they cut our payments completely. At the same time DH stopped work for a few weeks (he works casually, so no leave payments, or anything). We were already struggling before this as apart from living beyond our means already , we moved and I crashed the rental van, which we then had to pay for.

Anyway, we now have 2 credit cards that are maxed out and we can no longer meet the minimum repayments, plus three overdue bills, one of which has gone to a debt collector. We also have a personal loan that we are currently a little bit behind on.

Anyway, next week, the new financial year starts. I have contacted the FTO and ensured that they have the correct income estimate for us (I even overestimated a bit, just to be on the safe side), and we will be getting FTA and FTB payments again from next week (lower than we were getting last year, but still something). DH is working again and has taken a couple of extra shifts for a few weeks. I have worked out a budget and think that within 6-8 weeks we can get on track again.

However, I have a few problems in regards to our outstanding debts, i.e.
1) The penalties for the credit cards being maxed out, and hence over the limit due to fees, etc, are so huge that every time we make a payment, we are even more behind by the end of the month than we were before. Is there anything that we can do to maybe stop the penalty for just one month??
2) I have tried to negotiate a payment plan with the provider of one overdue bill but we couldn't agree to anything reasonable. I am working something out with the other one. So far, they charged me a 20% fee for late payment, but as long as a have a few weeks to pay it off, I don't mind.
3) The debt collector has bullied us twice into agreeing to repayments that we could never hope to make, which we have defaulted on both times (we did make 2 payments, just lower ones than they wanted...) I tired to call them again and arrange something that we could stick to, but because we had not made the "promised" payments, they wouldn't let me.

I don't know what to do now. I am happy to pay all these bills, I just need a little more time. I don't mind paying interest, etc, as long as the penalties are reasonable and I can pay them over time. DH is seeing a financial counsellor today, but apparently they asked for a referral from Centrelink, which we don't have, as we don't get Centrelink payments... He is going to go anyway, but I don't know if they will see him. What can I do? I know that we shouldn't have defaulted on the payments that we said we would make, but what can we do when the people we speak to demand something that is completely beyond our means?? Any advice would be really appreciated.

[Kel001]

Hi Starfish

First of all - big Money is a total PITA and life would be sooo much easier without it!

I did see a post on BB from someone else about a debt helper company...I'll have a look and see if I can't find it again and give you the details but at any rate, it might be worth giving them a call and seeing what they can do?

I'll be back in a tick with the info...

[Kel001]

Found it!!

It was a post by LisaFire and she contacted a company called My Budget - just google it and check out their website. Sounds like it might be very helpful as they'll negotiate with debt collectors etc instead of you having to worry about it and will get you back on track

Good luck!!

[LimeSlice]

I would roll over your cc debts to another new card with low or no interest on repayments for 6-12 months, shop around. This will put them together and remove the MASSIVE interest you will be paying. And begin paying off whatever you can FIRST. They will cost you the most.
Make a payment arrangement with your bill's and speak to the company that has sent it to a debt collector - they can take them back so it doesn't affect your credit rating.

Talk to Centrelink and see perhaps if you are eligible for a $500 loan - not sure which payments can get this but I got one earlier in the year and it helped me cover some outstanding bills until we have income again.

Contact the Salvos or Smith family - they will usually do it one day a week, you must go down to the office with your outstanding bill and they will pay it for you.

And budget. You will need to be very strict until you are on top of things again. Personally unless you are tens of thousands in debt I would stay away from My Budget, have heard some not so good things about them.

Perhaps go and speak with a financial planner through your bank, they are usually free when organised through your bank.

Good luck

[Ella]

We have been in financial trouble also and were getting bullied by debt collectors. The best advice I cangive you is to call the Salvo's and see one of their free financial counselors. They are so helpful and will help you with any budgeting bits you need, they will help you decide what repayments you will be able to stick to and then will be happy to ring the debt collectors for you and advocate on your behalf and get the debt collector to agree to the amount you can afford, its amazing that they will bully you but never a financial counselor.

Worked really well for us and I ended up being able to negotiate with the companies after that no problem as they realised I wouldn't agree to things I couldn't pay no matter what they said!

[Anila]

Hi hunni, i wanna send u some hugs and let u know it will all work out ok, i know, im going through something very similar and although it sometimes feels like the world is against u, there is a shinning light at the end of the tunnel.

Basically my hubby left work to study for 6 mths, when the study was ova we thought hed get a job straight away but he didnt, he was then unemployed for 6 mths, only being on centerlink and having major bills already, we then have to move out of our house as it sold, we were paying cheap rent as it was family owned, but then we were hit with reality rent which was an extra $150 a week, there went our bill money, we had debt collecters calling, and we were becomming depressed etc

We had to step out of our funk and this is what we did...
Cancelled foxtel, home phone and internet, we were hit with default bills, but we couldnt pay either way.
we saw a free life line councilor and she gave us some advice, first and formost, u pay rent/mortgage, then u pay food, then car/petrol and electricity! She said in no way were we to pay the debt collecters, centerlink money isnt enough to cover these payments, she said they may send u bulling letters and threten to take u to court, but they wont, they never do!

[Arimeh]

I don't really know Do the salvo's have a financial help person?

Do you have anything you have laying around the house that you can sell on ebay - and put that money straight on the credit card?

[Jennifer13]

I agree with LS's advice on the cc debts - get a new card with a balance transfer rate of 0% and put both of your old cards onto this one. It will allow you to nominate your existing card balances when you apply. That should give you at least six months (depending on the new cc provider's terms) to pay off the balances without paying interest. Alternatively, you could try speaking with your current bank and telling them you are going to switch, is there any way they will match the offer or can you transfer another card to the one you have with 0% interest?

If you have a good history with the bank you have your cc/s with you can always try ringing them and asking them to waive the fee. I have done this before when I missed a payment for the first time. If you have been a customer for some time you can use that in your favour. It's always a person that you're dealing with, they might be happy to help you.

GL.

[RhiChiChi]

I agree with LS's advice on the cc debts - get a new card with a balance transfer rate of 0% and put both of your old cards onto this one. It will allow you to nominate your existing card balances when you apply. That should give you at least six months (depending on the new cc provider's terms) to pay off the balances without paying interest. Alternatively, you could try speaking with your current bank and telling them you are going to switch, is there any way they will match the offer or can you transfer another card to the one you have with 0% interest?

If you have a good history with the bank you have your cc/s with you can always try ringing them and asking them to waive the fee. I have done this before when I missed a payment for the first time. If you have been a customer for some time you can use that in your favour. It's always a person that you're dealing with, they might be happy to help you.

GL.

And get rid of the old credit cards - cancel them and cut them up & do not take up any other offers. Once you start paying them down ask the bank / finance company to reduce the limits on them too so you cannot re-draw them back up.

[Pandora]

Starfish - my bank did something similar with my cc, but I had to close it before they would.
I got six months at zero interest with minimal (50/mth) repayments for that time and then it reverts to normal payments. Mine was with westpac thru westpac assist

[Bumperstump Cummerbund]

The credit card was with Citibank, and when it started getting overdrawn I just rang up and spoke to their financial department. They did push a bit, 'Just pay this amount, just pay that amount', so I asked to speak to the supervisor. I then just straight out told them that I had been made redundant, we were down to one wage, and tey could either choose to help me or sit back and watch my debt climb, because food and electricity were more important. They sent me out some forms, asking for DH's wage, our outgoings, our assets etc. A week later I got the call saying they were giving us the 'holiday', and they would reassess at the end of 3 months, and extend it if necessary

I'm not saying its easy, and you'll probably be routed through India, but try and keep your cool and remember the end result

[Anila]

Glad to see things went ok for ur hubby today!

[Mum2Romone]

Glad to see Hubbys appointment went well

[Natasha]

Re. the credit cards...

I would try get the debt consolidated, cut up the credit cards so you know you will never be able to incur any more debt on them again, and make a payment plan with the bank who gave you them as to how much you will be able to (in real life) repay, there is no point in letting them force you into an unrealistic figure.
Just be honest with them, let them know that you've done up a budget for yourself and this is what you can afford to make in repayments.