Any Advice? Very bad Credit Card debt...

[Rick93]

I have nothing to lose, by declaring how bad my credit card situation is...

I would like to see if anyone can provide some advice or options for me...

Here it goes....

I have a total of seven ( 07 ) all up.

3 x AMEX
1x CBA
1x Westpac
1x ANZ
1 x Citibank

Total credit limit = $165,000.
Total currently owing = $153,000. ( plus personal loans total outstanding of about $30,000. )

Briefly, I got to this position over a several year period of four kids at Private School; changing jobs often; getting a mortgage, and having a wife, who doesn't work, in order to put time into raising our children.

As I mentioned on another thread, I seem to have 'blown' my credit rating, by applying for too many cards in last five years.

We still owe about $265,000. on our mortgage, against a value of $300,000 - $350,000. ( no recent valuation - not expecting a good result in current climate )

Any ideas on how to approach a debt consolidation request to ANYONE ???

Thanks,
GORDO

 

[Maca44]

With total debts of $418K, and only $35K equity in your property I doubt whether you will succeeed in your attempts to consolidate as you are too much of a risk to banks etc.

I note in other threads that you are still using credit cards for purchases which increases your debt further, and it would appear you don't have the ability to pay off the cards, albeit you may be meeting the monthly interest fees. You need to cut up all your credit cards, live on your earnings and with what is left over (if any) pay off your credit card debts as the interest rate is huge. Your wife may have to get work, and you should consider the public school system to lessen your debt otherwise you chance losing everything.

 

[Rick93]

Thanks Macca,

Kids are going to a different school this year.
Wife will probably start looking for suitable job.
As for "cutting up " my cards, I have actually done that with all but two - my AMEX Platinum, and a CBA low rate. These are the ones I use to 'keeping living'.

Because I go through stages of employment variation, I have needed to have credit standing by, in order to keep things going.

Hence, I used to do Balance Transfers every month / second month.

I recently had to resign from The Public Service, due to working too many hours. My manager said, I was an OH&S risk. I said, I need to work 70 - 80 hours a week to help get out of debt. Their solution to help me.... told me to resign, or go on a 'Code of Conduct' charge. Now I'm back to a transitional casual job, while I apply for full time in something. Then, I'll probably have to wait a full twelve months, before I'm eligible for any consolidation loan ( if any ).

( oh, to win Lotto !!! )

GORDO

 

[serfty]

Sorry to hear of your situation.

I suggest you speak to a financial counselor. Many modern municipal councils or welfare agencies offer such services FOC or can point you in the right direction.

Ignoring the personal loans, that much CC debt with an average interest rate of say, 15% PA, would cost at least $23,000PA (or $440 per week) to service the interest alone - then you need to start repaying the principle!

A counselor will ask questions like: Is the debt entirely in your name? Is you house jointly held? They can advise you on how to make requests to institutions for the debts to be waived ... yes, that's correct, waived.

However, be prepared to be told Bankruptcy is your best option.:shock:

 

[Hvr]

Serfty has outlined your options. These actions need to be taken immediately. Also be aware that even if you contact a financial counsellor on Monday morning it may be several weeks before you can actually see someone. They are absolutely flat out.

Noting that there may be a delay you should speak to your credit providers and tell them what you are doing to resolve your debt, at the very least it lets them know you are being proactive and not fleeing. I suggest they may cancel your cards so be prepared.

It is of concern that financial institutions would actually allow you to have so much debt on your wage. Assumptions made in this statement are, maximum level for overtime in federal Australian Public Service (APS6) tops out at about $75k (may be very slightly different depending upon agency). State public service may pay a little more.

Based on the debt of $418k this is approximately 5.5 times your maximum annual wage ($75k).

I also suggest that there is a lot more to your employment situation than you have outlined (and it is entirely your business). To be put on a Code of Conduct "charge" for doing excessive overtime is not correct, more likely you probably, repeatedly refused to follow a reasonable instruction, most likely to cease doing this amount of overtime, from your supervisor.

Overtime at that level is simply not sustainable for a very long period. As you have discovered you must never ever rely on overtime for financial security. It can dry up at a moments notice.


What you can do until you see the financial counsellor is cease using all of your cards immediately. Since you're not paying them off in full every month the magic of compound interest means you are accruing interest on interest on interest let alone the original debt.

Also, make a budget based on real figures, actual income and essential spending. You have no discretionary spending ability for a very long time.

Finally, don't delay. Your problem is very very serious and delaying the inevitable only prolongs and worsens the problem.

 

[docjames]

Gordon, you are in a difficult situation. All the advice you have so far is worthwhile.

I'd add to those suggesting that you seek professional advice. Working as a health professional, you'll understand that people with health problems need to see a health professional, rather than try and solve their problem(s) on their own. Financial problems are the same - seek the help of a professional, especially as in this case it's is not only your financial health, but that of your family as well.

3 x AMEX
1x CBA
1x Westpac
1x ANZ
1 x Citibank

It looks like you've tried (from previous threads) approaching Amex without much luck. If you're hesistant to see a financial counsellor (which seems to be message #1) - perhaps then you also try your other credit providers and see if at least some of the debt can be consolidated - better for them to make 10-14% from you in a personal loan or similar, than lose the lot trying to extract 20%+. And of course, better for you.


Good luck. Let us know how you go.

 

[NYCguy]

All very good advice. I would reiterate that it is essential to stay in contact with your creditors, and try to beat out a repayment schedule ASAP.

 

[mr_greg444]

As mentioned above you need to pay off the credit cards. I’m only throwing ideas around, but if you can somehow increase your mortgage, you can use that money to pay off your credit cards. That will at least decrease the interest repayments.

Get rid of all your credit cards if possible and use a debit card instead. You will not have the risk of debt with a debit and no annual fees to pay.

 

[Dave Noble]

I also suggest that there is a lot more to your employment situation than you have outlined (and it is entirely your business). To be put on a Code of Conduct "charge" for doing excessive overtime is not correct, more likely you probably, repeatedly refused to follow a reasonable instruction, most likely to cease doing this amount of overtime, from your supervisor.

That's not necessarily the case. Depending on the job, getting into that level of debt can be a cause.

Dave

 

[QF WP]

Gordon, kudos for reaching out for help before the debt cycle got impossible to control - from which bankruptcy is generally the only option.

Certainly, I reiterate the financial counsellor approach. I still think you can stave off bankruptcy, but you need to be willing to be very precise with your income.

I assume that you can make, at very least, the interest charge as serfty pointed out above. Doing balance transfers to the cards with the lowest interest charges, thus reducing the overall interest component. Then make all available repayments to the cards with the highest interest rates.

I would look at keeping the CBA low rate card for use only when you can't meet your commitments, which hopefully will be few and far between. Paying for things that you need by cash will ensure you don't over-extend.

The changes you have made will help not to exacerbate your situation and may even have freed up sufficient cashflow to help reduce the debt over time...

 

[Evan]

From what i have heard it may be possible with the assistance of a financial adviser to get the card company to accept a lower interest rate and a repayment schedule, i guess the adviser tells them its like this, bankruptcy with 1 or 2% recovery or a slow payment schedule, take your pick and the CC card company's would take the risk for the greater returns.

Depending on your situation bankruptcy could be a viable option, its a bad bad thing to do but sometimes it could be a better option, professional advise is what is needed. Still i would advise against such a move if possible.

I am suprised they managed to let you get into that much debt but i see the same thing in Singapore were people manage amazing debt on small incomes and the banks allow them.

I cant offer much advise as i am not in a position to do so but i hope that you can sort it out.

E

 

[Chicken or Beef]

I really feel for you Gordo. I hope you can take ownership of your situation and realise that, just as you got yourself into this predicament, you can get out of it.

My only advice is for others out there to hear the alarm bells well and truly before you get anywhere near this point!

Live within your means and don't try and keep up with the Jones'.

 

[Evan]

Also if you have not already, drop the pay tv and things not needed, not required phone lines, you know how it works, try and live on the minimum possible to pay off as much debt as possible.
E

 

[rwatts]

Also if you have not already, drop the pay tv and things not needed, not required phone lines, you know how it works, try and live on the minimum possible to pay off as much debt as possible.
E

I'm by no means accusing Gordo as I have no knowledge of his circumstances other than what he has disclosed to us, but I am constantly amazed by people who cry poverty yet have pay tv on their large screen plasmas, the latest game consoles, use (abuse ?) mobile phones, smoke heavily, drink regularly at the pub, etc.

Every so often I create a cash flow crisis for myself (albeit through investing) and amaze myself just how frugally I can live for extended periods. However I always have the luxury of a light at the end of the tunnel that I know is not an oncoming train.

I admire Gordo immensely for seeking advice for his situation and believe it demonstrates he is serious about escaping from the burden. I think the advice already given of consulting a financial counselor is the best avenue since it will take minute examination of every financial detail to plan a possible way out.

Congratulations Gordo, and Good Luck.

Richard.

 

[oz_mark]

As others have described in a fashion, I think you need to get a handle on what you are spending all the money on, and see what can be done to reduce your expenditure. Basically, is there an option for coming up with a realistic budget that you can live on, and yes this may mean going without some things for a time.

Savings here can be put back into getting your debt down. But all this will likely require some professional help, so do take the advice of getting financial help with this.

 

[Rick93]

Thanks to all , who have contributed thus far to my post.

I appreciate your time in writing some lengthy options and supporting advice.

Just re: my previous Public Service job ( without naming the agency - though, you might guess ), I wasn't actually charged with anything. The boss suggested I resign. That's all.

Her rationale was, I can be called upon to transport children in a Departmental vehicle at any time; I may be required to act with little time to assess, a situation of aggressive parents, whilst supplying them with 'bad' news, either in their home, or a secure interview room. I could be ( and did several times ) required to work all day, then take a 'displaced' adolescent to a motel room for the night ( min. of two staff attending ), should there be no other 'crisis' accommodation available.

After any 'official' overtime duty, I was given time off to 'recover'. However, I would go out and work one of my three concurrent casual jobs.

So, it wasn't excessive 'overtime' that was the issue. It was me working four jobs. Eg. 9-5 in the office, then doing a night shift from 2200 - 0700, then going straight back to the 'office' the next day.

I would get a few hours sleep prior to heading off to night shift, and if it was 'quiet' at night, I had up to a two hour 'sleep' break. That was enough to keep me going.

I did that ( working 70 - 80 hours per week ) for eight full months of 2008.

In fact, whilst training in Sydney, not only did I work the three jobs, but I travelled back and forward to the Wollongong region from Sydney, to do my night shift, then drive back in the morning, to be in 'class' by 0900.

The thing was. I got used to it, and there never was any problem, or lack of 'work performance'. It was all 'potential' issues that concerned my manager. Unfortunately, a manager saw me leaving the Sydney hotel one night, dressed in a 'uniform' of a type that obviously indicated, that I was heading off to work somewhere. ( instead of 'resting' during the night for the next day of the course )

I had an emailed message, asking a direct question... " Are you currently
engaged in Secondary Employment...?"
If so, why have you not declared this matter?
You are hereby required to attend my office on........ and an interview was conducted, which basically spelt out the 'end' of my time with that Department.

Despite bouncing from one job to another.... I still manage to gross around $120,000 - $150,000. pa I don't have any real problem paying the min. amount due on my cards. Of course, it's just, I'll be paying them off until I'm 80 yo. !!!! ( 49 now ).

Rest assured, I will be seeing a Financial Counsellor in the near future. and yes, I probably won't like the serious changes to lifestyle that are likely to be necessary.

But hey ! I'm still going to need one CC, and I still want to 'dream' about far away travel etc. So, I'll still be around this Forum.

thanks again guys, for your advice and support.

GORDO

 

[Chicken or Beef]

But hey ! I'm still going to need one CC, and I still want to 'dream' about far away travel etc. So, I'll still be around this Forum.

GORDO

May I then suggest you don't declare yourself bankrupt. Although it will be possible for your to retain your passport, it will be a lot harder for you to leave Australia.

 

[Dave Noble]

I would say that looking at the level of debts, that going for bankruptcy would look like the v logical approach. Rather than try and avoid it, look at how it may well be beneficial. I know a couple of people who went through it and it was just the cure for the problem; the 3 year tonic

Obviously you would need to give up any credit cards et al and getting new ones ( though I would suggest that they are not something you want to get back into ) for 7 years is not likely to occur

Dave

 

[serfty]

I had a work associate who took this 'tonic' in the late 90's. I was surprised they did not have to surrender their passport.

Our employment involved some O/S travel and for each trip the employer had to supply a letter to the authority (ITSA?) giving a brief synopsis of the travel requirement and arrangements.

... seemed not to be a problem.

 

[bambbbam2]

May I then suggest you don't declare yourself bankrupt. it will be a lot harder for you to leave Australia.

Well not really.. however you will have to get approval from a bankruptcy trustee.

I think Bankruptcy is an qabsolute last resort.. a debt agreement would be better.

More info here
http://www.itsa.gov.au/

and more here
http://www.fredappleton.com.au/