Defaults and Debt agreements

[Shaneelastic]

Gents,
Afriend of mine has two defaults on his file.
7K Telstra
3K Vodaphone

Tekstra in 2008, VF in 2010.

They basically want to improve there credit history/score for the future.

Will a debt agreement work

Or should they just bide time, not do anything, pay everything in cash and if they needed something in say 4-5 ears time use a second tier lender

Income 40K per annum 2 kids single

Cash <1000
Thanks

Please - no smart alex responses about how someone can get in that type of trouble with phones etc!!!

 

[Ted]

you can't do much wait for 5 years to pass by then it will clear.

 

[BradW82]

I was a similar situation as your friend some time ago ,

I basically used the debt payment as a bargaining tool and had creditcorp agree to remove the default upon payment of the debt. This worked for me for a $14,000 default from CBA which they also discounted about 50% if I remember correctly. Not everyone will go for this as I had a little trouble with Vodafone for $128 ! I had to wait that one out for a while .

Just an Idea that worked for me .
Good luck,

Brad

 

[Truly Exotic]

Australia doesn't have a credit score,

Just any negative hits/records

Tose two defaults a re negatives

You could pay it and some lenders may look at that positively

Debt agreements are a big no no

It's basically another form of bankruptcy so you.re basically screwed for life give or take

Unfortunaelyey, I don't have an easy solution for you

 

[Aaron_C]

Those defaults are too big for most lenders to consider at any reasonable interest rate.

 

[Mick C]

Defaults are too large for standard lenders to consider- best option would to pay down the debt and wait 12 month ....your friend will need to keep the LVR below 80% as well.

A debt agreement may or may not work, as telstra and VF will still have it listed in the credit file as "paid default" - hence the 2 years wait. UNLESS the telco are happy to remove the listing ( including paid default ).

But def keep it under 80% LVR.

 

[Mick C]

Debt agreements are a big no no

It's basically another form of bankruptcy so you.re basically screwed for life give or take

Debt agreements is jsut a contract btw the 2 parties on how and when they will pay out the loan with set conditions and expectations from both parties.

Can alwasy have VF to agree on removing the listing /history once the debt is paid out.

 

[tobe]

you can't do much wait for 5 years to pass by then it will clear.

Common misconception. At the end of five years, the listing company will either re list on your report, or sell it to another collection company who will relist it. Defaults dont go away.

The best option for these two is to bargain for a price at which the debt is to be shown as paid, and then get finance in at least 12 months time after payment. Any then probably to only a maximum of 90%LVR.

Another option is to engage a solicitor to see if the defaults were legally listed. if there was any fault in the listing paperwork, they may be able to be removed entirely. this option can be costly, and can take some time.

They can use a second tier lender, who can lend to 90%LVR. Interest rate is quite high, however after 12 months with a repayment history, and the default paid, they can be refinanced to normal rates.

 

[Aaron_C]

Just also note that there is a difference between your 'normal' default, like your telco/utility default, and a 'financial' default, which is your credit card / home loan. The former you can get away with more easily than the latter. Sometimes even $1 of a financial default is fatal.