Hello All,
I am in my early 30’s, have a 60K a year job. Due to some stuff ups in my life I am in about 45-50 K debt, mostly credit cards. I already have 2 defauls on my credit file.
I can pay half of the debt now by refinancing my friend’s home and organise some kind of repayment plan for the rest. It could be manageable. I would though still have 2 defaults (although paid off) on my credit file for 5 years.
Or is it better to simply declare a bankruptcy and forget about the debt (I know there will be still some repayments)?
Or is it possible to get a loan while being an bankrupt if someone will be a guarantor, or get it under higher interest?
My 2 defaults – how bad are they, if they are as bad as bankruptcy, then I might as well save some money and headaches.Hi leoau,
I won’t sugar coat it. I’ll leave that to Bob-a-Dob.
You probably realise that the current choices are all pretty unpalatable, and are the result of previous poor choices. The way you are weighing things up in your post with your different options, you appear to be taking the easy way out again, which inevitably will lead to worse choices again, the whole thing spiralling downwards. You seem quite prepared to dump your creditors in the ditch and move on. Did you enjoy the good or service they provided to you on credit – i.e. the promise to pay them back ??
Noel Whittaker has written an excellent piece on this very subject of making choices in one of his earlier books.
I was disappointed that one of your choices wasn’t “Knuckle down, reign in my expenses and pay the loan/s back ASAP”.
The only thing you can do is start making the ‘proper’ choices to get yourself back into the arena where the choices are more pleasant. None of those ‘proper’ choices will result in easy and nice consequences. It’ll be tough and uphill all the way.
Personally, it would be a massive knock to my integrity to have to declare “bankruptcy” and I’d do absolutely everything in my power to avoid that ‘end of the line’ option, regardless if it looked like the easy option and saved me a bit of money. Maybe taking the easy options has led to this in the first place ??
If you are serious about getting out of your current predicament, I’d live like a pauper, cut up the cards, chuck away every conceivable luxury in your life and eliminate the accumulated debt in about 18 or 24 months of extremely hard slog. Some good habits might have permeated through in that timeframe and you might be on your way.
Og Mandano was in a far worse position than yourself and made a huge financial success of his life. Look him up.
I’m not saying you are nearly in that situation, but you have a hard road ahead to hoe. If you haven’t or aren’t prepared to change your habits that got yourself in the hole to start with, then the only one you’re kidding is yourself.
What are you prepared to sacrifice, or maybe more to the point, what are you not prepared to give up to get out of your position ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
hi leoau
I totally agree with Dazzling. Make as much effort as you can to pay off the defaults otherwise you may as well forget about being a property investor for a long time. Lending institutions will make it very difficult for you.
I had a $270.00 defalut on my credit history as a result of forgetting a mobile phone bill and going overseas for 3 years, it was paid immediately as soon as I was made aware of it (3 years later). Lending institutions still make it difficult for me, every time we make a refinance application, it has to be coupled with a letter of explanation of “why did I not pay the $270″. We even had a $1.m development delayed for the sake of two hundred and seventy b%$#@Y dollars”.
I can imagine how hard they would make it for amounts greater than that, even 2 of them.
Do yourself a favour, prove that you are reliable otherwise no one will trust you.
We buy properties in all conditions. Can offer Immediate Cash Settlements, No Real Estate Agents Required
[email protected]
phone 0412 437 582Hi leoau,
The only way that you can get yourself out of the proverbial is by working very, very hard. It sounds to me that the seriousness of the dilemma youre in hasn’t sunk in given that you are considering the easy option of bankruptcy. So by virtue of the fact that you are trawling this forum, you are obviously interested in creating wealth for yourself. Don’t take the easy option. Fight `tooth & nail’ to beat the defaults and make some plans for the future.
Eric
Couldn’t agree more with the above posts. Bankruptcy might seem like the “easy” option but it has other implications.
Buckle down and get serious about getting yourself out of this predicament. Not only will you do it faster than sitting waiting for your bankruptcy period to pass, you’ll also feel a whole lot better about yourself and put in place some good habits that will allow you to start investing sooner.
Good luck
Megan
Gentlemen,
I do appreciate the time and effort you put into replying to me. Thank you.
My question was not about morality of ‘dumping’ my creditors, but rather about consequences in doing so for my future borrowing ability.
Without telling the whole story of my life, I’ll add this. I tried to pay my debts off. All of them. Initially I wanted to go into Part 9 Debt agreement, but it is the same thing for the lender as the bankruptcy itself.
Then after getting the job, I approached every creditor, made some informal agreements with them. They freeze the interest and I repay them gradually (mind you, I have paid hips of interest by that time). 2 months later after I started paying as per our agreements, one bank decides that they ‘are not a charity’ and don’t lend the money without interest. And I was as back to square 1 – my repayments barely covered the interest only, so I would have to be paying till the rest f my days. 2 more banks sold the debts to debt collectors – they ‘could not’ find any records of me making the informal agreement!!
So, do 2 defaults equal to bankruptcy or not?Not if you are in contact with them, organising a repayment plan, (a formal agreement). Sure it’s hard but as Dazzling said, you will probably learn some valuable lessons from it.
By the way Dazzling, your advice is always amazing!hi leoau
clarify for me what the question is.1.bankruptcy and the results
2.2 defaults and can you lend to defaulters
3.how to repay the debt
all of the posts have told you the problem with going bankrupt there are a few more like not being able to join most syndicates for most business dealings.
Bankruptcy is designed for a companies that has no possibility of trading out of its debts.
my best advice is talk to a financial advicer all the banks have there own (prefered). the salvo’s have a couple also.
As a last resort go to your local court and see the chamber magistrate tell him that the two card companies are going to bankrupt you and ask him if there is any way of getting a judgement similar to garneshing your wages for a certain amount listen to his advice write down as much as possible, this is a very risky position for you and is a last resort because if you don’t pay as perscribed for any reason or the court increase the min amount it will become very difficult financilly for you.if successfull with garnishing you can ask that this is not put on the ccra data base funnier things have happened in courts.
you can try legal aid but I think at 60k you will not qualifyhere to help
Plain and simple as you seem not to have understood all of the above wise replies.
Choose Bankruptcy if that is what you want. But it will be a very very long time and much harder to ever become financially free or ever wealthy.
Choose Hard work and Determination now while you are still 30 young to claw back the $50,000 in debt (small in the scheme of things). All the investors here are advising you to do this as they know that credibility is a big key to financial success, a key that you seem so prepared to throw away.
Once you have a bit of credibility and show that you can repay debt and save, then you can easily make $50,000 from one property deal………But don’t choose this lightly. You have to commit to this with your heart and soul……It would be worth it in the end! Then you can start with the support and advice of the above people who have given you many smart options.Don’t make a foolish decision based on comparing 2 defaults to bankruptcy, YOU ARE MISSING THE BIGGER PICTURE.
Live, Learn and GrowLifexperience
Hi leoau This is my first time in with a serious reply.I agree with all the above replies.My advice is to work hard to pay off debts.There is a strategy to use to do this.Basically concentrate all extra income into your highest interest debt then when this is paid,use the same amount of extra income to pay off the next highest interest loan.You will soon have your debts under control and hopefully have a savings habit to build on. Regards Bill
hey leoau ,i think youve been spanked enough ha ha. seriously though i think gross realisation has words of wisdom.obviously some people think they are high and mighty ! we all make mistakes ,as long as we learn from them. good luck dude.
Hi leoau,
The numbers are a bit lower, but I’ll tell you where I am at.
I earn approx 50k a year and have approx 25k in debt.
I’m currently saving about 500 a month into an ING account so that I have the deposit money for a 150-160k house around Hobart somewhere.
Through microsoft money 99 Ive used the debt reduction planner to work out how much extra I have to pay to get 3 of the 4 debts out of the way by mid next year, and the largest debt paid by mid 2007.
As well as budgeting in microsoft money, I also make note of everything I spend for a pay period into a spreadsheet.
I will no longer buy anything on credit!
Basically with your debts, pay down the one with the highest interest first. Add up the minimum monthly payments for each debt, work out from your budget how much extra you can afford to throw at your debt, then that extra amount goes on the one with the highest interest.
I wouldnt refinance my friend’s home and put them at risk, although I would look to see if any of the financiers that visit this site could advise re consolidating your loans/card so the interest is lower?
More stuff on the voigtstr at http://users.bigpond.net.au/voigtstr
Hi voigtstr
Not sure if you read this but here goes.
most reasonable successfull business people have gone to the bottom of the barrell (thats business) the ones that surface are the ones that take the risk again but this time they don’t make the same mistake (yours is cards)the best business people diversify.
Instead of relying on one income from one business you rely on lots of little incomes from lots of business.
I will keep saying look at little syndicates that can help each other.
you now know the value of money and to some extent how it works, this time use the money you have wisely and leverage with it.
For leoau all this advice is free nobody has to give you any of it so my best advice is use it.
as for bashing you around the ears well sorry but that life I get bashed every meeting, comes with the territoryhere to help
Thanks gross.
I’m determined not to use cards again. And I should be debt free (except for mortgage) by mid 2007… then all my spending power can go into investing.oh and hey, once my debts are gone, feel free me to tell me more about these syndicates!
More stuff on the voigtstr at http://users.bigpond.net.au/voigtstr
Have you got your own property?? If you do there are lenders that will look at your case and make the payments affordable. By using your friend easy money you will get yourself back at the ditch real quick! You should be responsible for your own affair!
Hey leaou,
Sensing a pattern from the above? All the posts have a similar ring to them, and they are all from people who care about the success of other like minded people. My advice, try the tips in a book that I have just read, it is simple, but sometimes this is best… Its called Anyone Can Be a Millionaire by someone O’Reilly. It might be just what youre looking for.
Peace.It’s great that everyone can re-iterate Dazzling’s post but can anyone actually answer Leou’s questions?
The questions are: Is it possible to get a loan while bankrupt (with or without a guarantor),
and, Is having 2 defaults as bad as bankruptcy in terms of getting a loan?
leoau,
I think you need to do your research on bankruptcy. Obviously, most people on here have not gone bankrupt, but lots of wealth gurus have. In fact, some brag about it as part of their marketing. [thumbsdownanim
Try this website for info on bankruptcy:
kay henry
hi leoau and oshen
If the question is the same as oshen says then.
the answer is.
No to the first part you would not get a loan from any financial organisation and I very much dought from a private investor.
As for the 2 defaults depends what relationship the broker has with that lending institution depends if a loan is possible.
As for dazzling’s posts I don’t follow anybody
I give my opinion and must be taken as a general opinion.here to help
I beleive that people currently not discharged from Bankruptcy cannot obtain loans. see http://www.itsa.gov.au for more info on Bankruptcy.
Once you are discharged (3yrs?) you can get a loan, but the rates will be very high due to the extra risk involved.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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