Are those debt negotiating crowds any good ?

[random]

There's been a string of ads just this last wk on TV .
They say they'll negotiate your debt if your in trouble and often get people a new all interest stopped repayment plan on say their credit cards or whatever is is they're in trouble with.
Do they really work , do they cost , any catches ?

 

[BayView]

Anyone who is advertising a product or service on radio, tv, mags, newspapers....will be charging you money.

The catch is you will be forking out more to pay them for their services when you most likely can't afford it, and I'd wager the fees aren't bordering on cheap.

But, many folk have no other choice I guess.

 

[AlmostBob]

Bull sh__, Music, symphony orchestra

If the first were the second, this would be the third

IF there were any validity in the claims, word of mouth would be such an extensive thing, there would be no need to advertise.

If an entity with no 'dog in the fight' could tell your creditors, 'just no interest mate', then so could you, anyone

There are a number of reports from multiple countries and multiple news services, Aus included, that these are less than 100% effective

http://www.lifehacker.com.au/2009/04/why-debt-relief-services-wont-help-with-debt-reduction/
http://www.choice.com.au/reviews-and-tests/money/borrowing/managing-debt/find-relief-from-debt.aspx

I guess if you keep your doubt at full power, and read everything before believing anything, you may find real help

Westpac offer the service, obviously they plan to make money at it, at who's expense, is the question

 

[Macca]

There's been a string of ads just this last wk on TV .
They say they'll negotiate your debt if your in trouble and often get people a new all interest stopped repayment plan on say their credit cards or whatever is is they're in trouble with.
Do they really work , do they cost , any catches ?

In layman's terms they are usually using Part X of the Bankruptcy act to hold a creditors meeting and create a binding agreement between the debtor and the creditors.

Some links, not recommendations but explanations
http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/
http://www.worrells.net.au/Content/InsolvencyResources/InsolvencyResourceArticle.aspx?ArticleId=58

This is basically an amalgamation of all debts which are then repaid over a fixed term with one repayment each month or week. If the amounts are too large then they may make a part offer to creditors of "x" cents in the dollar of debt. Once the amount and terms are agreed then all debt pursuit stops as long as regular repayments are met.

In the USA it is Part 11 (I think), still a freeze of assets while things are negotiated and sorted.

Guess who gets to charge very large fees to manage all this paperwork

 

[redwing]

The simplest solution would seem to be to get in touch with the organisation you owe money to (your creditor), explain your changed circumstances and negotiate an arrangement to pay?

Simon had a good thread here also Taming the Debt Monster - Attitudes to debt for young players

 

[random]

Thanks for those guys.
So what could l do right now talking first thing Monday , with a credit card l can't manage right now.
l'd like to work out a repayment plan with them , close the card completely and pay it down over time, preferably at a better IR.
l can't refinance which was our original plan because we're selling everything very soon now instead .
Everythings taken a serious dive my end so l can't rejugle any more income or budget better but this cards killing us. Even at that though because we're selling up asap, the best solution is just leave everything else as is but l do just need to work something out with this damn card like yesterday.
So what's the best thing to do - approach if all the debt mobs are a crock ?
l did ring 4 of them Friday , afraid you guys seem right unless there is one good one l missed.
Only got one to give a rough idea of their fee and that was 1500 - upfront would you believe- what a bloody crock . Imagine hitting people in that position for 1500 bucks upfront, what fkg scum !

 

[HotRod]

Thanks for those guys.
So what could l do right now talking first thing Monday , with a credit card l can't manage right now.
l'd like to work out a repayment plan with them , close the card completely and pay it down over time, preferably at a better IR.
l can't refinance which was our original plan because we're selling everything very soon now instead .
Everythings taken a serious dive my end so l can't rejugle any more income or budget better but this cards killing us. Even at that though because we're selling up asap, the best solution is just leave everything else as is but l do just need to work something out with this damn card like yesterday.
So what's the best thing to do - approach if all the debt mobs are a crock ?
l did ring 4 of them Friday , afraid you guys seem right unless there is one good one l missed.
Only got one to give a rough idea of their fee and that was 1500 - upfront would you believe- what a bloody crock . Imagine hitting people in that position for 1500 bucks upfront, what fkg scum !

They'll probably advocate putting that on a credit card too.

 

[Terry_w]

I've had a bit of success negotiating with cc companies in the past. Got debts down to 33 % to 50% of original. (for clients).

But to do this you have to be able to offer a lump sum payment and have a story.

If you cannot do this then ring them anyway and tell them your story and ask them what they can offer. Then ask for more.

 

[Kinnon Bell]

Avoid these companies at all costs if you can. Usually it means you entering into a Part IX debt agreement which isn't that many steps away from bankruptcy. You credit record will be stuffed for the next 5-7 years.

Depending on the bank your credit card is with there may be a few options:
- Negotiate your interest rate with them to a lower rate
- Ask if they have a hardship service where they can put a stop on your interest and repayments for a certain period of time while you get back on your feet
- See if you can swap your card to one with a lower interest rate
- See if they will negotiate the debt with you directly. Depending how far you are behind on your repayments that would probably rather reduce your debt by 50% than sell it off to a debt collection agency for 3c in the $1. This option usually requires you to pay the amount in full though
- You can still close a card with a balance on it. If you find you're not disciplined enough to pay the card without using it then close it and treat it like a principal and interest loan. If you like, PM me the balance and current interest rate and I can run a couple of scenarios like if you pay $XX per month you have it paid in 3 years or if you want it paid out in 2 years than you need to pay $XXp/m. I'm sure there's tools on the internet that does the same too
- Get a cash advance restriction put on the card
- Reduce your limit as you pay the card down so the temptation is not there to spend once you pay it down

These are just a few options coming to mind now, but anything would be better than the option you're thinking.

 

[Terry_w]

Whether it gets to a Part IX agreement or not will depend how far gone you are. Most would not I imagine.

Negotiating and getting discounts on credit card balances and interest rates will also not affect your credit file. Entering bankruptcy or a Part IX or X agreement certainly would though.

 

[random]

Thanks so much for these . Damn site more helpful than spending a mind bending few hrs on Friday to those mobs.
Well, l've only missed the one payment this mth plus a bit over drawn- few hundred, nothin but anybody would think l robbed a bank they've been calling 3x a day for 2wks. Used that last few k on it to finance a job but it didn't pay as well as it was meant to and everything else came in , couldn't put it back in.
We've looked after it like clockwork 7yrs but do you think they give a toss.
l even spoke to them last payment and did put a few hundred on , all l had.
They did do one hardship 6mth stint for me 12mths ago but works gotten even worse since and other stuffs happened.
Can't swap to another unfortunately , my numbers this yr are just too ugly .

 

[DaveM]

Yeah dont avoid their calls, best thing is to keep communication open and discuss your situation. You are better positioned to negotiate if you answer, avoiding calls means they will send it off to collections and issue a default notice.

Do you have the ability to take out a personal loan to reduce the interest rate?

 

[Kinnon Bell]

Whether it gets to a Part IX agreement or not will depend how far gone you are. Most would not I imagine.

You'd be surprised. Anecdotally, people seem to enter into these agreements not being aware or told of the full implications. They just seem to think it's an easy way out with no negative repercussions. They then get a nasty surprise when they go for lending and are knocked back due to an adverse credit history.

There's one company that seems quite notorious for this whose names pops up often.

 

[redwing]

Most Banks also have a hardship otion where you can suspend your mortgage repayments, or take a mortgage repayment holiday for a set period of time

See also Trouble with Debt from ASIC Moneysmart

I recall with my wife she had her house loan and car loan separate, taking these to a new lender with a cheaper rate and consolidating these reduced the payments markedly; however if you're selling the PPoR also that's a moot point

 

[MRO]

22k , retail store card. .

As part of this difficult process you may need to consider changing your spending habits and doing a better budget. What ever has lead you to this situation needs to be looked at.

I don't know your full story/circumstances but $22k on a retail store card sounds alarm bells for me. It is has obviously been a long road to get to where you are. It is good to see you are finally trying to deal with it rather than shuffling the debt.

Good luck.

 

[random]

Ha ha, you think ? That's a good one , l don't think you've quite comprehended the year we've had .

 

[random]

Well guys , the deeds been done and we have a very good deal , l'm just not sure if l shoulda tried something else so l'd like to run it by you.
BTW , MBO , do you think you could edit your post and take out the C name please , might be best.
And secondly , you guys were so right btw , have a drink and get on the phone yourself , it certainly is a lot cheaper and simpler that's for sure .

They were pretty good actually . They needed to know my full situation and finances - pretty ugly right now ! Then what l could commit to paying per mth right now.
That ones pretty hard when your self employed , near impossible right now actually but l tried 150pm on just for now .
She countered that with a what about - we could do you a permanent hardship deal , no CR damage , it goes no further , $270min' pm straight of the principle forever until it's payed out. Zero interest but we do close the card . We also wave all back payments owing which now is about 1k and the new repayments don't start until next mth.

So it was normally around $450 pm min when maxed, so a 180pm saving plus no interest, pretty good wouldn't you think and we did want to close that anyway, very high rate.

What do you think ? Not a done deal yet until l sign on it .

 

[marg4000]

Just be VERY sure that you can comply with the conditions you agree to. It may be better to commit to a lower monthly payment that you are certain you can manage rather than a higher one you hope you can.

Work like mad to get that debt paid off.

Good luck!
Marg

PS: Sounds like a pretty good deal if you can manage the agreed payments.

 

[redwing]

All the best moving forward Random

Keep us posted

 

[random]

Thanks for those.
Marg that in all honesty is a bit of a concern. See we intended refinancing early this yr but things have changed big time and we're selling up everything instead.
Add works down , our other place isn't renting out right now because it needs new work so we're selling that one as is as too tight. so we're paying for that too right now and way minus in cash until something sells.

The problem is , they said that's the min' they can except on that deal.
They can go lower but this deal goes out the window and it starts getting really complicated. You've gotta start with that gov approval thing , stacks of paperwork,probing , the interest kicks back in .

So l am a bit worried about that short term as we have so much going on right now. Long term though great deal so it's a tough call.