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...

[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?

[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!

[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.

[Anila]

oops sorry i must have hit post
ok continueing on from my pp

I called my credit card company and aplied for financial hardship, they put a stop on all fees for 3 mths etc, i also wrote emails to people we owed money to saying that we realise we owe them money, and once we were financial we would pay them.

We put in order of less expesive to most expesive debt, and when we could we would pay 15 a fornigt on the bill, at times it was super hard, our mobiles were cancelled and we felt like we had no connection with the out side world, we got a pre paid, so family could call us, we also just last week got pre paid internet, my hubby has been at his new job 4 weeks, and although we still have a long way to go i think we have already come so far.

did u know the government offers a once only payment through the electicity company where they will pay ur bill if u are having finance issues?

I found food outlets such as the golden circle factory outlet a fantastic way of helping fill my once empty pantry, and there are comunity groups that hand out food parcels when ur in need!

Its not something u can fix over night, it takes time, i sometimes think i could have handled things better in regards to letting people know what was going on, and my marriage was so close to being ripped apart all because of money, but the struggle does get better.

Please feel free to pm and ask questions, i only gave a small sample of what we went through, there was heaps more, and although we still have debt i dont feel as lost as i used to.

hth

[Just Me]

Starfish - Just wanted to offer you some support. I think sometimes situations crop up that we don't expect and we can find ourselves in financial trouble. A couple of years ago, DH's boss stopped paying him so for 3 months we lived off credit cards and racked up nearly $10'000 worth of debt. His boss never paid him and ended up going bust so our money problems compounded one on top of the other until we were in a substantial amount more debt (it is embarrassing to say how much). We have only just started to get on top of it all now - we haven't paid the debt off completely yet, but it takes time to get on top of things and now we feel like we are actually making headway with it. It has been a really hard few years and it will be for a couple more I suspect. I just wanted to let you know that you aren't alone. It isn't a fun place to be, but I hope things start looking up for you in the next few weeks to months. Good luck.

[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.

[Starfish]

Thanks everyone for your replies. It feels so good to know that we're not the only ones in trouble. Hugs to everyone else going through this. Its not nice, but I kind of think it puts things in perspective - i.e. that you really don't need money to be happy.

DH went to the financial counsellor today (it was a charity like the Salvo's or someone), and found out about the government electiricity payment that someone mentioned (at least I think that's what he said...) I am going to see them next week to organise this.

Thanks for the advice re not paying the debt collecotrs. I am so ****ed off with them and their bullying attitute. I will pay them when we're ready, and I spoke to a friend today who agreed that no one is going to take us to court for $200.

We can't apply for other credit cards, as ours are maxed out (already tried), and unfortunately I don't think that we have a good relationship with our banks anymore as we have been having problems with repayments for the past 3 months. I will see if we qualify for financial hardship.

I also made a call to a debt solution company last night and was told that they would call me back. So things are looking a little less bleak. Thank heaps everyone for your support.

Oh and the really good thing that's come out of this - I have realised that by buying fresh fruit and veg, etc, we have really cheap grocery bills and actually eat really healthily.

[Just Me]

Glad to hear that things are looking up for you, Starfish. You sound a lot more positive about everything. Good luck

[Bumperstump Cummerbund]

With your credit cards - relationship with the bank doesn't matter, they have hardship policies for a reason When I was out of work before getting this job, I called our credit card provider and, after filling in their mountains of paperwork, we were given a 3 month 'holiday', where no interest or fees were charges, and no payments were expected. Of course, we couldn't use the card in that time, but that was fine, I didn't want to. For the record, that particular card was worth $6k, and we were overdrawn by just over $400 when they gave us the 'holiday'.

Debt collectors - stand your ground hunny! You know what you can afford to pay, don't let them bully you. As you said, there is absolutely NO point entering into an arrangement you know you can't fulfil. I like the idea of calling the company who have referred it - and I would also recommend keeping a written record of ALL communication with the companies you have outstanding debts with. Owing money is no reason to be treated unfairly or disrespectfully, and if you have taken note of who said what, you would be surprised how much help the complaints dept can be.

I also just wanted to say something in general : These days, being in debt is nothing to be ashamed of. Particularly in the last few years, it has been ridiculously easy to get into a huge amount of debt, which may appear manageable when you sign on the dotted line, but when faced with a surprise baby, a redundancy, a car accident - things change fast and finances get out of control VERY easily. Please don't let embarrassment stop anyone from getting the help they need, because the sooner they seek help, the easier it will be

[Footsteps]

in the uk you can get template letters to send to tell them only contact you by letter...i have found the bailiffs won't say half the things they say in a letter because they would be in serious trouble. and over here a debts is sold for about 30% of the actual value to debt companys x

[Starfish]

Berenice - who did you speak to to get the 'holiday' on the credit card organised? That sounds exactly like what we need.

Oh, and DH spoke to the debt collector today and guess what? They agreed to a payment plan. But when I spoke to them they wouldn't... Stupid people.

[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