Debt Consoldiation

[Sticks&Stones]

Hi all,

I have been a member here for a few years now but created another account to ask this question as I wish the remain anonymous.

I currently owe roughly $5k in debts. I would love to be able to pay them off but we really don't have a lot of money. I can afford to pay roughly $100 per week in repayments and am hoping to look into debt consolidation.

I am wondering if anyone has done this and if so could you please provide me with some info? I really want to get these paid off asap. I have sold a lot of stuff on ebay, got rid of the phone, cut back our internet which DH still needs for work. We don't eat out, we don't buy a lot of new things or go away. So we can't really cut back our spending anymore iykwim.

Any info would be greatly appreciated.

[Netix]

HI S&S, I called Beyond Debt last week as I just couldn't cope with owing money to everyone (it felt like). All up I owe about 12k, and they offered me a payment plan of $80 p week for four years. What isn't paid off at the end of that time gets written off (meaning you don't have to pay for that amount). Its on your credit history for a while, I recommend you look on the Beyond Debt website, and give them a call. I spoke to them with having to give them all my details etc, they just asked who the debts were with and for how much.

Good luck, I hope you can get it all sorted soon. Lots of s

[Olive]

netix if you pay $80 a week over 4 years do you realise you will pay it all back and some??
you end up paying over 16k back...

[didispunk]

Olive, maybe there is interest added into that as well.

[Olive]

i know didi thats what i was saying, it seems quiet alot of interest

[didispunk]

Oh sorry!

ya it does seem like heaps! I know GE Creditline etc.. their interest goes up to 22.5% or so..
Maybe just a super higher rate!

[Olive]

eeekk at 22%
i guess thats the trade off for these kind of services, sticks&stones id certainly look into doing all you can before doing debt consolidation

[Fuzzywuzzy]

I would be trying to consolidate your debt with your bank and not one of those debt companies. Shop around for a good interest rate on a personal loan - you will still have to meet their borrowing requirements with regards to income and generally have a good record with paying your existing debts. At least that way you can get a lower interest rate and not have it on your credit history. Give you bank a call and see what they can do for you. Good luck!

[Netix]

Olive - I feel like a real nit! I didn't go for the agreement, as I wasn't even sure of getting the money off DH every week, and as it turns out, I managed to negotiate some really good arrangements with the co's that I owe money to anyway.

OMG, I can't believe I didn't check that...

[AnyDream]

would be trying to consolidate your debt with your bank and not one of those debt companies. Shop around for a good interest rate on a personal loan - you will still have to meet their borrowing requirements with regards to income and generally have a good record with paying your existing debts. At least that way you can get a lower interest rate and not have it on your credit history. Give you bank a call and see what they can do for you. Good luck!

This is very good advice.

The trick here is to minimise your interest rates...so try to borrow at the lowest possible rate, or you will be adding to your debt not reducing it (ie don't take out a personal loan with an interest rate of 21% to pay off a debt that is being charged at 9%). Be clever about it. Some of your debts will be costing you more than others, it pays to identify which ones are costing the most and pay those off first. Don't take out a higher interest loan to pay for a lower interest debt or you will cost yourself unneccessary $$.

For example if it's tax debt (or other govt depts) they tend to charge interest close to the rate of inflation (quite low), and often allow you to make an arrangement to pay it off much slower. That's better than paying off the same amount with a higher interest rate loan. But things like store credit and high rate credit cards etc need to be paid off first as they will cost you the most because the interest compounds. That means you pay interest on the interest they have already charged, so you end up paying an awful lot more than the actual interest rate.

Also, if you don't have any success with a personal loan, shop around for a low-interest credit card - they often have a reduced or interest-free rate for the first 6 - 12 months, if you're strict about making your payments weekly, and cut up your card so you can't add any debt to it, that could be an option, provided you get as much of your debt paid off during the low-interest period. But ONLY if you know you can be disciplined and not add to the debt by spending more.