Any Advice? Very bad Credit Card debt...

[rwatts]

Gordon has gone past this point but I found a useful tactic when money was short to pay off cards. I would scrape/borrow/beg enough money to pay the entire balance just before the due date. Then I would then use a cash advance from that card to repay the sources (or other pressing payments). It helps if you have another card handy with no carry-over balance to then use for purchases.

This meant interest only started from the date of the cash advance - instead of the dates of all the purchases. I only had to use this a couple of times (eg when I blew the transfer box on my Landcruiser) but I calculated at the time I saved a lot of money. I'll do just about anything to not carry a balance over credit card cycles !

Richard.

 

[serfty]

I note the mention of the TAX debt.

I have been across a situation where someone with an ~$150K debt to the tax department was actually encouraged by the ATO employee who's had the guy's brief to declare bankruptcy.

It seems the reasoning was that getting the debt off the books with a clean wipe was better for the ATO agent's KPI's when compared with undertaking an arrangement and having the debt hang around.

When the debtor oscillated about doing this, the ATO agent whacked a ~60K penalty Tax onto the debt making the decision far easier.

 

[bambbbam2]

The other thing to remember is that if you are likely to owe tax in the current financial year, is to do an amended return for the year-to-date, thereby getting an assessment from the ATO so that debt can be included in bankruptcy.

 

[Rick93]

Gee, thanks again guys. There's some interesting views here.

Aside from 'tax' issues, which actually relate to 'superannuation', rather than a PAYG position...

It is my personal CC / personal loan debt, that is the main issue.

I re-evaluated my position, and with 'everything' added, it is more like 200K.

My internet research has given me the concept of the ' Part X ' of the Bankruptcy Act. A Personal Insolvency Agreement ( PIA ) is my best and preferred option.

I'm not looking for a 'free' ride out of my responsibilities. A bit of a break would help though.

I've contacted a few accountancy firms, who provide this type of service. Still waiting for an evaluation from them... also, what fees are involved.

In response to many of the suggestions, I would say this....

All my Platinum cards have been transferred over to 'low rate' basic cards.

We don't have Pay TV, nor do my kids have a 'free run' on mobile phones.

I do have Broadband, but that's locked in for another 18 months.

I currently only have the one 'casual' job, and am working as many shifts as I can get. ( which = about 'full time' ) I'm waiting on various job applications, which should start to 'interview' shortly.

We're not spending on 'luxury' goods / services. Eg. going out dinner every week etc. However, it's hard to say to the kids, sorry, dad's broke, so there's no going away to camp this holiday, or you can't go to the beach with your friends, because we don't have any money....

I've done selling stuff on eBay.... it's very time consuming, for little return with most sales.

My wife found, that the Fed. Govt. offers no incentive to work, when she is paid Family Tax Benefit A + B.... during the times my income has dropped, due to various factors. Currently, she is 'baby sitting' her sister's kid, and there's another 'on the way'. ( There's a little 'hush hush' deal happening, if you know what I mean...)

So, basically, I think the Part X ( ten ) Section of the Act seems the best way to go. I've just got to select a provider of this service, and start the 'paper game'.

Sorry to pile all this 'doom & gloom' upon you all, but I wanted to get an idea of what you guys thought about this type of situation.

You've been helpful. Thanks....

regards,
GORDO

 

[mushypeas]

in all seriousness, going part 9/10 or full blown bankrupt doesnt make a difference to financial institutions in the future... at end of the day you were bankrupt.

given the level of your debts, it is honourable that you want to at least offer X amount in the dollar but if I were you and as heartwrenching as it must be, I'd look at full blown bankruptcy.

you don't have sufficient equity in your home so the trustee won't be interested in taking possession to sell it.

also, the likes of freeman fox and all those other "accountants" are not there to assist you, they are there to feed off the proceeds of your bankrupt estate ie: fees ... you need to seriously look at the pro's and con's and make your own decisions as this is a VERY personal thing.

good luck in whatever way you choose mate.

 

[straitman]

Gordon,

Whilst there is a lot of good intentioned advice here there is only one totally sound piece and that is from the only person here (that I’m aware of) qualified in these matters. This is found in posts # 10 & 39. The rest is a mix of very good ideas, some personal experience and a small amount of well intended, though emotional misinformation. What is important now though is how to transfer the ideas to your situation.

Go and seek assistance from a financial counsellor! Ensure it’s someone who you are 100% comfortable with and trust totally because they are going to have to push you quite hard to solve this situation. If you have any second thoughts about the counsellor get a second opinion and if you feel it will help take all of the suggestions and ideas to the counsellor for his/her thoughts.

Good luck.

 

[Diesellife]

Re: AMEX going broke ???

Hi Gordon,

I recognized you through the other post (The one from : Any Advice?......), I hope you have since then found a financial planner for yourself as your current situation is rather critical.

Even tho I've done financial planning before, I'm by no mean in here to give you any advise in any ways but to give you a clear snap shot of your current finance.

For your privacy, I will not post any figures in here and will only illustrate in percentage. You are more than welcome to PM me should you need the figures.

Here is the snap shot:

Your current debt level is way over responsible lending. I don't know how you got all those credit cards with that maximum amount. Your current credit card monthly repayment alone is around 54.5% of your cleared income. On top of that you have another 35% of your total income for other loans including mortgage. That leaves you only a little over 10% of your income to support the whole household of 6.

Under my analysis, it only seems that you are surviving off the balance transfer which the interest represents 30% of your income. Without it, you are more likely to incur a series of cash flow problems and have a monthly deficit.

Here is my opinion:

More credit and refinance is out of the question at the moment as no one will accept that kind of risk on the paper. As other suggested, a financial planner may be able to advise you on different options (Mainly bankruptcy to be honest). And hopefully you can get it all organised before too late and disrupted the life of your children.

 

[serfty]

... also, the likes of freeman fox and all those other "accountants" are not there to assist you, they are there to feed off the proceeds of your bankrupt estate ie: fees ... you need to seriously look at the pro's and con's and make your own decisions as this is a VERY personal thing. ...

Should you look to go bankrupt the above is true.

In fact, community funded financial advisors are your best bet - not paid by reaping some of your remaining assets as phat-dave mentions.

Here a link to the ITSA web page which generically summarises your options:

• ITSA

 

[Diesellife]

Hi Gordon,

If I remember correctly, you are not be eligible for Part IX or X agreement. It is because your total debt and income exceeded the indexed threshold amount.

Just double check with your financial adviser or accountant.

 

[markis10]

Hi Gordon,

If I remember correctly, you are not be eligible for Part IX or X agreement. It is because your total debt and income exceeded the indexed threshold amount.

Just double check with your financial adviser or accountant.

As previously posted Gordon cannot get Part IX, Part X has no limits.

 

[Diesellife]

Sorry, yes part X PIA has no limit. Haven't done it for a long time

 

[JohnK]

Gordon I can sympathise with you as we are in a similar situation.

Over the years I have got myself into trouble through gambling, which is still a problem now, failed relationship with ex-fiancé and the recent obsession with travelling overseas when I wasn’t working and could not afford to pay for the travel. I kept getting one credit card after another and just this year alone I have added 3 new credit cards to the collection, and increased the credit limit on others, although I have been able to get rid of the Earth card and the high debt associated with it. I am not going to mention figures but the number of credit cards I have in my possession is greater than yours and my debt is higher.

It has gotten to the point where I have to work in Brisbane, whilst still living in Sydney, but even this is not helping as my pay does not cover the cost of rent, cost of commuting, everyday expenses and the minimum monthly repayment on my credit cards. Most months I make the minimum payment on one card then withdraw some of the money to pay the minimum payment on another card and so on.

I was lucky enough recently with some balance transfers from Amex that have reduced a fair amount of the interest to be paid every month but Amex no longer offers this feature. I am also able to utilise balance transfers on lower interest rates from CBA low rate MasterCard and Visa and HSBC low rate MasterCard.

When I have some spare money available, better if it is ~$5,000, I do a balance transfer from Bank West MasterCard to CBA MasterCard and then a balance transfer from CBA MasterCard to HSBC MasterCard and then a balance transfer from HSBC MasterCard to CBA Visa and then a balance transfer from CBA Visa to either Bank West MasterCard or Citibank Ready credit. This helps to reduce the interest rate as I am only paying 5.99% with CBA for 5 months and 6.99% with HSBC for 6 months on the ~$5,000. When the low interest period is over I repeat the exercise. It is not a perfect plan but it has helped to reduce the interest every month.

I have postponed any overseas travel indefinitely although I will keep some of my luxuries and continue to commute each week if only to maintain some of my sanity. I only use the Amex Gold credit card, for general expenses, and the Wizard MasterCard for cash advances when overseas. The other credit cards are just used to juggle the balance transfers. I am also trying to pay off the credit cards with the highest minimum payments each month and also the credit cards with the highest interest rates. If I reduce the minimum monthly repayment then I can pay off more of the principal rather than continue to pay interest only. And then by reducing the principal I will have a little more money to use for balance transfers and hopefully reduce overall credit card debt.

I have a spreadsheet with the position of each credit card at any point in time. How much I owe, interest rates, projected interest every month, projected minimum monthly payment every month etc. If I stick to the plan I can see when each of the cards will be paid off. The road ahead is not easy in fact it is very difficult. I don’t know how long I will last and there are many hurdles and temptations, like gambling, along the way.

I am lucky in a way in that I have investment properties, yes with mortgage but the rent covers repayments, modest share portfolio and cash reserves. My parents keep telling me to come back home to Sydney, sell one of the investment properties and pay off credit cards and have a break from work. I can lead a comfortable lifestyle but it would mean no luxuries or travel overseas. But then there is no guarantee that I will not get into debt again. My thoughts at the moment are stay in debt to prevent getting into more debt. Does that make sense? It sort of makes sense to me.

I am not looking for sympathy or solutions to my credit card debt. I got myself into this mess and I will get myself out of it but thankfully I do not need to resort to bankruptcy. Good luck to all of us….

 

[Rick93]

JohnK,

How brave of you, to declare the stigma of 'gambling'.
Unfotunately, this was an element of my situation, at one point.
I used to do 'the machines', and over a twenty year period, I've lost the equivalent of my house.
I hate myself for it.
You will of course, appreciate what I mean.... others will only only lay blame squarely on my own failings.

As you know, things mount up. There comes a time, when there's no way out.
My confession here.... is I once thought of the benefit to my wife and kids, of my life insurance policies !! It's a way for them to get somewhere in life, after I've stuffed up completely.

I think I'm posting this stuff, because I've had a few drinks, plus a few medicinal products.

My phone call today, strongly adviced Bankruptcy, not a PIA.

I think I now agree. It's not a 'honourable' way out, but I have no choice. I just can't see how I will survive 2009. I have to do it....

I'm seeing people next week.

I'm sure there are others like us out there. I'm only making this admission, to show, that ordinary people, who are not 'high flyers', or genuine business travellers, the dangers of romantising about being a 'frequent flyer', and getting 'deals' on their credit card expenditure.

I've been depressed over all this for some time now.... I need to get out. Bankrupcy is my only real chance at having a life after 50. I don't know how long I can keep working for, but with the debt I currently have ( my fault or not ), I don't think I'll make it past 60. My father died of a heart attack in the back yard at 59. He had financial worries as well.

I'll leave it there.... I think I must be rambling by now....

best wishes to all who are struggling.
GORDO

 

[Dave Noble]

My phone call today, strongly adviced Bankruptcy, not a PIA.

I think I now agree. It's not a 'honourable' way out, but I have no choice. I just can't see how I will survive 2009. I have to do it....

I'm seeing people next week.

I've been depressed over all this for some time now.... I need to get out. Bankrupcy is my only real chance at having a life after 50. I don't know how long I can keep working for, but with the debt I currently have ( my fault or not ), I don't think I'll make it past 60. My father died of a heart attack in the back yard at 59. He had financial worries as well.

It may not be 'honourable' but it may well be the sensible way forward for you. On the positive side, once you have taken the plunge and entered into the process that you will almost certainly be in a position where the stress will be greatly relieved and you will be able to see the faint glimmer of light as you head towards the tunnel exit

Hopefully in a few years time, this will all just be a fading memory

Dave

 

[JohnK]

How brave of you, to declare the stigma of 'gambling'.

Giving up smoking, after 25 years and a heart attack, was easy. Gambling is a chronic disease. It is there for life. I have been gambling since I was 14-15 years old and it is hereditary. I can stop for a length of time but then when I start I can't stop again. I would hate to calculate how much I have lost in the last 25 years of working but I am certain that had I not gambled I would have been retired now.

I think I'm posting this stuff, because I've had a few drinks, plus a few medicinal products.

Sometimes it is good to get things out of the system even if it is only rambling to strangers. There are others with worse problems than ours.

Good luck with whatever you decide. I hope things work out and you can get back to enjoying life and the time you spend with your family....

 

[Diesellife]

Hi Gordon,

Although the bankruptcy may not seem to be honorable but I believe most of the people will agree that your life is more important. No one on this planet makes no mistake, therefore it is just an important lesson in life to learn, although you took that lesson at a later stage of your life. Don't talk about the stupid stuff of suicide or life insurance policy that kind of stuff, I personally have grown up from that kind of family and I've been and done that to myself, it simply does not solve anything. Life is all about get back up and walk thru it till the end, letting go what you have now and rebuild a future.

After bankruptcy, life will not be as easy but at least it wouldn't be as hard as you current are. There is still a 3 years period that you have to budget and plan ahead. Being not as easy, I mean your after tax income before contribution with 4 dependents are $55275. I believe your current income is way above contribution limit (50c is need to contribution is needed after that). Perhaps you can consider to cut down you job a little, let your wife get a part-time job etc.

The plus side is that you get more time to spend with your kids and your wife which was a luxury to you before bankruptcy as you've been working 70-80hrs a week. It's time to participate and enjoy what's ahead of you, don't let the darkness blind you from seeing all the other beauties in the world. Some people may not be even to see their kids growing up, graduating from uni etc.

From here I wish you all the best and be strong.

To JohnK,

I'm a person who loves to gamble, I guess I really love the thrill of winning.
I admit that I gamble too much as everyone seems to know me in Crown Casino. I've also poured in a couple of houses to their balance sheet. As much as I possess all the information I need for managing finance, it does not get me out of the cycle. I still gamble for fun and getting it down to the minimum. I totally understand what you mean by staying in debt to stop yourself from falling deeper. But have you considered to find some other interest / focus to let yourself indulge into? It's always good to know other fellow gambler and how they deal with their life. As I believe gambler leads another kind of lifestyle, sometime glamorous, sometimes poor, but the real master skill is how to corp with that without having one's life falling apart...

 

[Alanslegal]

It will be a slow arduous road ahead but at least you are aiming to go forward. Good luck Gordon.

 

[Alanslegal]

I'm a person who loves to gamble, I guess I really love the thrill of winning.
...... As I believe gambler leads another kind of lifestyle, sometime glamorous, sometimes poor, but the real master skill is how to corp with that without having one's life falling apart...

I know this isn't for me, but I agree totally.

I was once a serial gambler at Star City here in Sydney. Some aim to be a Platinum FF - I was aiming to be Platiunm SC (Star City) member.

About a decade ago - I spent up to 18hours per day, day after day at the Black Jack tables. (luckily I was still young and studying in univesity) when I had a depressing break up with my then GF and thought I could win her back - so gambling it was!

About a month into the addiction, I had a positive balance of $60K and thought I would buy myself a nice Mazda MX5 convertible. After thinking about how easy it was to win money, I decided to go and win another $60K and buy a Mercedes convertible instead. I even had grand plans to purchase my first house using winnings from the casino, buying it after buying the convertible :shock:

A gambler's perspective is wild. Normal daily expenditure seemed really really really affordable. A $80 t shirt - bought. A $400 wallet - bought. No questions asked as the mind would tell you "I lose $200 per hand at the casino anyway"

To cut it short, the $60k didnt eventuate into $120K but into a debt and I had flunked that year at university. I stopped visitng the casino - which was V tough initially - and had to get my life back on track.

Almost ten years on I do still gamble but in much more (I hope) controlled manner - mainly on sports such as NBA, tennis, Football, NHL, NRL but no casino!

 

[JohnK]

I totally understand what you mean by staying in debt to stop yourself from falling deeper. But have you considered to find some other interest / focus to let yourself indulge into?

I have tried many things, distractions, but eventually the disease returns. The temptation is everywhere, whether it be a pub or club. Thank God we have not turned out like Europe where even pizza shops, hamburger shops have 1 or 2 slot machines. I have beaten the addiction in the past on a number of occasions and I will beat it again.

I have been lucky that I have had great family support over the years but unfortunately living away from home is not easy. I may need to return to the days where someone else takes care of my finances and I do not have ready access to money....

 

[simongr]

Itis interesting that you say about the "fruit machines" in the pubs in the UK. I used to dump cash into them regularly when I lived in the UK but have never really been tempted to put money through pokies here for two main reasons - they are mind numbling boring here by comparision to the variety and games in the UK (you an even exert an element of skill to enhance your chance of winning) and they were more accessibl - I have no interesting in going into the Casion here.