Archive for the 'Arrears & Bad Credit' Category
July 22, 2008 12:00am
MORE Queenslanders than ever before are defaulting on their mortgages and losing their homes to the banks, caused by high interest rates and petrol pain.
State court records show the number of property repossessions has escalated in the past few months and housing experts blame rising petrol prices as much as interest rates for the spike in cases around Brisbane’s urban fringe.
Records show the number of repossessed residential and commercial properties hit a record 1019 last year and continued at the same rate – about 85 a month – until May.
But a Courier-Mail search of electronic court files has revealed the state’s Supreme and District courts handled 100 property repossession cases in June and another 83 cases by July 17, with two weeks of the month still to go.
The figures show a majority of the recently surrendered homes were in suburbs surrounding Brisbane and on the Gold Coast.
Browns Plains couple Robert and Bettina Bengtsson have to come up with a seemingly impossible sum of money within days or have their Browns Plains home repossessed.
Aged 31 and 27, with a nine-month-old baby to look after, the Bengtssons have already cashed in their super, looked for higher-paying jobs and tried to start a business.
But they are still about $14,000 behind in their mortgage payments, which they have defaulted on numerous times.
Mr Bengtsson said the nightmare started when they both lost their jobs. Mrs Bengtsson was pregnant when she lost hers.
“Everything was going great and then the company I was working for decided they were going to close down nightshift, so I took an involuntary redundancy and my wife, because she was a casual … they just said she wasn’t needed any more,” Mr Bengtsson said.
“When we first got the house it was only $437 a week, so we were paying $500 a week.
“And now it is up to about $550 a week, so it has jumped over $120 in those two years.
Bray Park, Scarborough, Narangba, Alexandra Hills, Kingston, Browns Plains and Thorneside are the top targets for repossessions in Brisbane, while Carrara, Arundel, Ormeau Hills, Currumbin, Tallebudgera Valley, Runaway Bay and Surfers Paradise were some of the affected suburbs on the Gold Coast.
National Shelter chairman Adrian Pisarski said the figures demonstrated the compounding effect of high petrol prices on already financially stressed homebuyers.
“It always seems to be in areas poorly serviced by public transport,” he said.
“People there are double-whammied. Their housing costs are going up and their transport costs are very high because they are car dependent.
“I think many households would cope with one or the other, but not both.”
Housing Industry Association chief economist Harley Dale said a higher rate of mortgage defaults was expected, given the increased burden of interest rates and petrol prices.
HIA calculations show the repayments on a $250,000 loan would have increased by $449 a month in the past three years, while the monthly cost of petrol for an average household would have risen by $150 in the same time.
It has been estimated that about 160,000 Queensland households are experiencing mortgage stress.
“There is no doubt it is a much more difficult environment out there in 2008 than it was in 2007,” Mr Dale said.
Mortgage and Finance Association Queensland president Bruce Mawson said stalled property values had exposed some stretched homebuyers, who had been in the habit of using the equity in their home loans to pay off other debts.
He urged anyone having trouble making their mortgage repayments to talk to their bank as soon as possible.
When a marriage comes to an end, it is always a tragedy. Of course the ending of the family unit and the emotional hardship for the children is the most difficult at the time of divorce. But the difficulty of separating one home into two can be challenging and tedious to say the least.
In addition to the management of the divorce, the household debt that was once shared as part of the family financial picture, must also be divided. In most joint credit contracts in Australia both parties are jointly & severally liable for the debt. So when the union splits up, the transition, from a financial point of view of your accounts separating, is not over night.
So one of the many issues to be discussed or managed is a plan on how to deal with the household debt. This is where emotions can get the better of people or a lack of awareness of not keeping up with these responsibilities in a timely fashion, that can have a NEGATIIVE IMPACT ON YOUR CREDIT FILE FOR UP TO 5 YEARS!
To put this into context, the oversight of not paying or perhaps abusing credit cards limits or trying to get one up on your ex will dog you for a considerable time after your relationship is no more.
Over the next 5 years your requirement for finance is likely to grow again through one reason or another. As a result of a dissolved relationship you will carry the poor credit burden.
Does an impaired credit rating stop you obtaining credit? No! There are various lenders who cater to these sorts of situations. However it will come with an increased cost via interest rates and alike. And in a tightening credit environment, most lenders are becoming more & more particular in who they are prepared to lend money to.
However it pays to be mindful these sorts of solutions are not for extended period of time and are usually one component of a strategy to re-engineer your financial position.
In trying address some these scenario’s it may pay to consider some of the following:
Credit Card Limits – do they need to be cancelled or the limit reduced.
Budget – for 2 households, do the books balance?
Income – what & how you receive may change – support pensions, maintenance. How lenders view these may differ dramatically. What impact is it likely to have moving forward?
Remember most loans for a couple have joint & several repayment requirements. So if one party is not making payments the responsibility will be sort from you.
While this situation is most always challenging there are ways to deal with issues ahead of time and certainly if it has already taken place there are always differing solutions to assist in managing your finance requirements in the intermediate future.
Finance Know How is one who is willing to listen and provide some options for your consideration.
The Days of Easy Credit are at an End
Author: adminBy Kate Perry – Courier Mail
June 11, 2008 12:00am
- Lenders are not as free and easy with credit as they were
- The number of people checking their credit has doubled this year
- Unpaid bills will sit on your credit report for up to 5 years
THE days of easy credit are over, with lenders make it tougher to borrow money, and consumers struggling with mounting debts, credit agency Dun & Bradstreet says.
D&B said as it becomes tougher to borrow money more people are taking an interest in their credit status.
Since December last year the number of the number of Australians checking their credit file has more than doubled. D&B said this could be because more people are being denied credit or just want to check their credit is in good order before applying for money.
Your credit records are checked whenever you apply for mainstream credit - whether it’s a credit card, bank loan or in-store finance.
Data out yesterday from the Australian Bureau of Statistics showed that Australians’ appetite for credit has not dimmed. Total personal loans rose 5.8 per cent in April to $6.9 billion, up from $6.5 billion in March.
Lenders toughening up
D&B’s chief executive Christine Christian says the days of easy access to credit have come to an end and lenders are becoming choosier about who they’ll deal with.
“In the current environment banks are only willing to lend to those that don’t have adverse information on their record- they won’t take a risk on anyone with outstanding debts, missed payments or court actions against their name,” she said.
Unpaid bills linger
Not paying a utility or phone bill can leave a stain on your credit report that will take up to five years to clear. Paying the bill late will not be enough to clear your record. If there’s a blight on your credit report you’ll find it all but impossible to get access to mainstream credit like bank loans or credit cards.
You can get a copy of your credit report by contacting credit agencies like Dun & Bradstreet or Veda Advantage.
Protect yourself
It’s important to protect yourself from other people’s debt. If you live in a shared house, but it’s your name on the utility or phone bill, it’s you the debt collectors will come chasing.
If you’re in a relationship, make sure you read the fine print before agreeing to go guarantor on a loan, or putting your name to a bill. If the romance turns sour you could be lumped with the repayments, or ‘sexually transmitted debt’ .
If you are behind in your bills and have debt collectors knocking on your door, make sure you know your rights. Never ignore late payment demands or phone calls from debt collectors, instead try to negotiate a payment plan.
Fix a Bad Credit Rating
Author: adminStep 1 – Know your credit rating
Before most organizations will lend you money they will look at your credit rating to assess whether you have a good conduct in paying debts.
A bad credit rating can increase the cost of lending and or hinder you in gaining further credit. The sort of things that are noted could be having your power cut off; your car repossessed or perhaps have missed payments on credit cards or mortgage. Can also include clear outs. (This is where a lender has tried to make contact by phone & writing without success. As a result they have listed you as a missing borrower)
Obtaining a copy of your credit file can be free if you are prepared to wait 10 days, however for a fee you can have it a whole lot quicker.
Step 2 – Clear up any disputed credit records
If you believe that a company has unfairly listed an overdue notice on your credit file, you should contact them as soon as possible to seek clarification for any incorrect information. This should be amended immediately.
If this is not rectified appropriately you can contact Banking & Financial Services Ombudsman (http://www.bfso.org.au) or the Telecommunications Industry Ombudsman (www.tio.com.au)
Step 3 – Improve your credit rating
Ensure that you are meeting all credit payments on time, so you can demonstrate that you able to make good on your commitments to another prospective lender.
This may be done with the assistance of your bank. They will be able to establish automatic payments to your respective loans.
Step 4 – Get help from Family and friends & locate budgeting tools
See if you can get a partner/friend to check that you are paying your bills on time. There is several good budgeting software options that are available to assist with managing your cash. Financial counselors may also be a reference point (www.afccra.org) for you.
However if you are unable to make it work there are several options which may be available to you through debt mediation or debt agreements. Debt agreements in effect is a form of insolvency. Care needs to be taken when dealing in these areas as fees are payable for the process. It is a good idea to get a few quotes for comparison.
How to Work Out if Debt Consolidation is for me?
Author: adminYou want to keep your home, but with rates on the move, and your personal debt getting out of control it will only get harder from here on.
Debt consolidation or debt refinance may be an option. What this does is that a lender will refinance all your debts with whomever the credit provider is, and will refinance these into your mortgage. What’s the benefit? A couple outcomes –
1- single repayment,
2- you have the chance to reduce your monthly repayments - which means more cash in your pocket!!!
This is not always going to be as easy as walking into your existing mortgage lender and asking for a consolidation. I’m sure they will be willing to help however they will have various rules & limitations which may not fit all your needs or goals. There are lot of funders out there all with different rules to play by. The value of your security or house may well be a factor along with your income type and level. The reason you are in a particular situation may well determine which lender will provide a better option. It may be of assistance in engaging a finance broker to work through the best options for you. This is especially the case if you have been having trouble keeping up with it all and have late payments.
In a lot of cases the refinance and consolidation of all your liabilities like outstanding rates, tax debt, store cards and alike may not be able to be renegotiated in total & therefore other strategies may need to be considered in conjunction with the refinance.
All these approaches should only be considered for an intermediate period. It may take 12-24 months to re-engineer your financial position for the future at which time a new set of strategy’s are determined and adopted to meet your next series of financial goals.
So if you think you can survive better with getting your repayments down before rates continue to go up, give Finance Know How a call or email, or better yet you can talk to Howard online!
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