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Debt Consolidation Benefits Decline
The benefits of debt consolidation are fast decreasing. Most people consolidate credit card debt into personal loans. The main benefit is the lower interest rate. However the difference betweed credit card interest rates and personal loan interest rates is decreasing. With a difference of 5.5% in March 2008 the difference now is only 3.95% and expected to shrink. Reserve Bank data shows that interest rates on personal loans has been steadily climbing and the last time it was this high was June 1993. But I hear you say...
read moreThe Top 3 Causes of Bankruptcy in Australia
The data is clear; in Australia the top 3 causes of bankruptcy are: Unemployment Domestic discord (divorce, separation) Excessive use of credit I know it’s probably no surprise that the number one trigger for bankruptcy is unemployment. Unemployment is particularly destructive because it often arrives without warning. Suddenly you’re left with no means of servicing debt that only last week wasn’t even on your mind. It also may come as no surprise that the second major cause of bankruptcy in Australia is domestic discord/divorce....
read moreApproving a Debt Consolidation Loan
When approving a debt consolidation loan, what do banks think about? Approving loans really hasn’t changed much in 100 years. In the banking industry it’s referred to as the 4 C’s of Credit; Character, Capacity, Collateral, Conditions. The 4 C’s matter. Character This refers generally to your credit history but it also takes into account your education, where you live and how long you’ve been there, and your marital status. Example, young single man, moves every 3 months vs Man in 5 year De Facto Relationship...
read moreBankruptcy Brothel
Britain is fast finding out that watering down bankruptcy legislation can have unexpected consequences. Lenient insolvency laws (bankruptcy generally 12 months or less in Britain) are being exploited by both British and foreign companies to offload debt. The third largest Telecom in Greece moved its assets from Luxembourg, to its British 1 man 1 desk office. Two weeks later it started used bankruptcy law to wipe out more than 9 Million Pounds owing to the Royal Bank of Scotland. They formed a new company which had been freed of 1.3...
read moreGuarantor Question
Question My Dad went guarantor on my car loan. I’ve lost my job and I can’t afford to make the payments on the car; it’s still my debt right? What’s going to happen? Answer If you can’t make the payments on the loan, they will pursue your father for payments. They will generally pursue both you AND your father for the money, under the logic that this increases their chances of receiving some money. If both you and your father are unable to make payments, options for enforcing the debt include foreclosing on property (the car,...
read moreBorrowing money is easy. It’s making the repayments that can sometimes be difficult.
“Borrowing money is easy. It’s making the repayments that can sometimes be difficult. You might find you have overcommitted yourself or your circumstances have changed and you can no longer afford to meet your credit repayments. If this happens, it’s important that you don’t ignore the problem and hope it goes away, because it won’t.” (Consumer Affairs Australia) I was just web-browsing the other day when I came upon this quote. It is four sentences which perfectly detail the story of a bankruptcy or financial hardship victim –...
read moreDebt Consolidation Loans – what will stop you.
When overwhelmed with a multitude of debts, you might think about a debt consolidation loan. Debt Consolidation loans are not a sure thing. You don’t have a statutory right to finance. If your debts are above $50,000 and you don’t have property with equity to refinance, you won’t get a loan. If you have any kind of default these days (even $100.00 electricity bills), you wont get a loan. Don’t have a full time job? Or only been with your employer for a short period of time. You won’t get a loan. Owe any...
read moreBankruptcy – pros and cons
When it comes to clearing your debts, bankruptcy should be seen as a great last resort rather than an easy first option. The great thing about bankruptcy is that almost all of your debts will be cleared – credit card debt, personal loans, tax debt, unpaid phone and utility bills, and more. The only debts to remain will generally be court imposed fines and child support payments. The reason bankruptcy should be seen as a last resort is that it can impose quite limiting constraints on your life that other forms of debt help do not. Depending...
read moreJoint Debts
Question Hi, I’m having some problems with my debts; one of them is a loan I took out with my ex-girlfriend to buy some furniture when we moved in together, but now we’ve broken up. I’ll only have to pay half of that debt back, right? Answer A Joint Loan is something we get a lot of questions about. While you might think that when taking out a joint loan you are each liable for half the debt, you’re not. You’re actually both liable for the FULL amount. This is done to ensure that if one of you defaults...
read moreDebt Consolidation 3
If you’re considering debt consolidation, you need to be clear on why you’re doing it. Do you want to be debt free faster? Are you trying to repay less in total? Do you need reduce your repayments because you can’t afford them? Are you having trouble budgeting for multiple debts with different due dates? Be aware that debt consolidation can’t do all of these things at the same time. If you want to get the most out of debt consolidation, be clear about why you’re doing it. Debt Consolidation can only help you...
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