What actually happens if you don’t pay your debts?

Debt, Homeless, EvictionYour credit card bill is due but you don’t have the money. You’re sure that something bad will happen, but what exactly will happen, and when?

For the first 60 days nothing much will happen. You might get a helpful reminder to make a payment.

Somewhere between 60 and 90 days the bank may issue an S80 Default notice. Under Section 80 of the Consumer Credit Code, creditors are required to formally notify you that you are in breach of your credit conditions.  That is, you are in default. You are then given 30 days to make it up.

After the conclusion of the S80 30 day period, things start to get serious.  A formal default can, at this stage, be lodged on your credit history. This will be there for five years. During that time, it will make it hard to obtain finance. The bank will issue a Letter of Demand.  While this is not from the courts, it is a formal request that you make a payment amount by a specified date.

If you don’t make the payment requested on the Letter of Demand, court action can commence at this stage and you can be issued with a Statement of Claim.  If the court finds you do owe the money, the bank will be awarded a Judgement against you.

The creditor can enforce their debts through three main ways:

  1. They can Garnish your wages;
  2. Obtain a Writ (legal document from the court) to have a Sheriff seize your property or;
  3. If the debt is more than $5,000, they can legally make you bankrupt.

If you have no assets and your only income is government benefits, you are referred to in the industry as “judgement-proof”. This means a creditor can obtain judgement against you but they can’t actually enforce it.

 

If you’re experiencing financial hardship, we can help.
It takes less than 10 minutes for a debt management solution to be tailored to your current circumstances.
For a free, no obligation phone consultation with our caring team call 1300 171 351
You’ll be glad you did.

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Changes to the National Personal Insolvency Index (NPII)

NPII CelebrationEarlier this year, changes to the Privacy Act reduced the time debt agreements were recorded on credit histories from seven years, to five years.  However, that still meant it was recorded on the NPII forever.

In an exciting development, completed debt agreements will be removed from the NPII after five years following amendments to the Bankruptcy Act expected to take place in November 2015. Bankruptcy however will still carry the consequence of a permanent record.

This is a big win for Australians with financial problems. Most Australians don’t want to file for bankruptcy. They just want to make a payment they can afford which debt agreements allow. The changes further increase the benefits of debt agreements over bankruptcy.

The NPII was a permanent record of people who had filed for an insolvency matter including bankruptcy, debt agreement and Part X. It is now only a permanent record of bankruptcy.

 

If you’re experiencing financial hardship, we can help.
It takes less than 10 minutes for a debt management solution to be tailored to your current circumstances.
For a free, no obligation phone consultation with our caring team call 1300 171 351
You’ll be glad you did.

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5 Reasons you won’t ever be debt free.

  1. In debt foreverYou don’t know how much you owe – Really you don’t want to know. It’s a source of pain so you don’t look at it and pretend it will go away.
  2. You don’t know where your money goes – You earn money and by your next pay day it’s all gone, that’s as much as you know.  Use our budget calculator to see how much money you really have.
  3. You only pay the minimum – If you only pay the minimum you’re only paying the interest. Use our credit card repayment calculator to work out repayments.
  4. You have no plan – Even though you’ve been in the same situation for years, you have no plan on how you’re going to get debt free.
  5. She’ll be right – You think somehow it will all work out OK, even though you’ve been in the same situation for years, you don’t know how much you owe or where your money goes, you are only paying the minimum and you have no plan.

 

 

If you’re experiencing financial hardship, we can help.
It takes less than 10 minutes for a debt management solution to be tailored to your current circumstances.
For a free, no obligation phone consultation with our caring team call 1300 171 351
You’ll be glad you did.

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Things science says can make your family happy.

  1. iStock_000015170126_SmallEat dinner together – Actually it doesn’t have to be dinner, it can be breakfast as long as you all sit down together and eat. Children of families who eat together have lower rates of substance abuse, teen pregnancy, better mental health, higher grades, and lower rates of obesity.
  2. Have a meeting once a week – Set aside 10 minutes once a week to have a family meeting. Agenda – What is happening this week, what went wrong last week and how you can do it better, something good that happened to everyone last week, and feedback from everyone?
  3. Know your story – People who know their family story have higher levels of life satisfaction and are more resilient. The reasons for this include: being part of something greater than yourself going back multiple generations, knowing that previous generations have undergone misfortune, and knowing that you’re part of a family no matter what.
  4. Experiences not things – The more materialistic people are, the lower their level of happiness. The more time spent with family and friends the higher their level of happiness. So spend your money on holidays and other things done collectively as opposed to ‘things’ and activities done individually.
  5. Get outside – People who spend time outside have lower levels of cortisol, a stress hormone, than people who don’t. Maybe you can even combine 1 and 5 and go for a hike and a picnic.

Things Science Say that

If you’re experiencing financial hardship, we can help.
It takes less than 10 minutes for a debt management solution to be tailored to your current circumstances.
For a free, no obligation phone consultation with our caring team call 1300 171 351
You’ll be glad you did.

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Top 10 Reasons NOT to buy a house.

  1. House with a broken chain and shackle.It ties you down – If you sell one $600,000 house and buy another it will cost you about $30,000 (agent’s fees, legal fees and stamp duty) just to sell and buy again. This makes it expensive to move for job opportunities, love, or just for fun.
  2. The future is uncertain – People will buy a house that suits them NOW. You might by a unit in a trendy area but 2 moves later you’ve got 2 dogs, 3 kids and a house in a suburb with good schools. All of that is great but it cost you $120,000 in change due to expenses.
  3. No Home Maintenance – If you rent you don’t have to spend your weekends painting, doing yard work, cleaning gutters etc.
  4. No DIY – If you’re renting you don’t have to worry about redoing the kitchen or the bathroom which will cost you tens of thousands to only look out of date 6 months later.
  5. No expensive repairs –When renting, you don’t need to worry about air conditioners dying, hot water systems exploding, or ovens not working any more. Sure, these are inconvenient,but you don’t have to suddenly find $2,500 to replace the air conditioner.
  6. It’s more expensive – The average rent in Brisbane is $400, the average sale price including legal fees and stamp duty is $532,000. The average mortgage repayment plus the costs of owning a house (rates, water,etc) equals about  $700/week.  That’s a $300 difference!  At historic rates of rental rise it will take 14 years to catch up.
  7. Your own home might not be the best investment – If you invested that $300 per week in shares 30 years later you’d have $4.14 mil in shares  vs having a paid off house worth  $1.8 mil (30 year average return shares 10.8% vs 7.01% property)
  8. You don’t have a mortgage – Without all that debt you don’t have to watch TV the first Tuesday of every month to see if the RBA kept interest rates on hold. If things get tight you can move somewhere cheaper temporarily. Not having a mortgage keeps you flexible and nimble.
  9. Opportunity – If you don’t have a big oppressive mortgage you can use the left over money to start saving, investing or to start a business. Most people can never quit their jobs because they’ve “got a mortgage to pay”.
  10. Not bad debt but not great debt – Interest on your home loan isn’t a tax deduction, interest on a rental property is. If you really wanted to own property, the smarter way might be to rent then perhaps buy an investment property.

 

If you’re experiencing financial hardship, we can help.
It takes less than 10 minutes for a debt management solution to be tailored to your current circumstances.
For a free, no obligation phone consultation with our caring team call 1300 171 351
You’ll be glad you did.

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