What to do to clear your debt
1. Don’t make the mistake of ignoring demand letters or phone calls from unsecured creditors. Contact them as soon as possible ideally by phone first. Even if this is just to say that you want to work out a suitable repayment plan.
2. Discuss every conceivable option to allow you to pay the minimum amount possible based on your income and expenditure.
3. Always, always ask them to temporarily freeze the interest and late repayment charges as they are adding to your loan and because of this it can affect your ability to pay what they are demanding. Negotiate!
4. Ask them not to issue any legal proceedings until every available option is looked into.
5. Be honest about your present circumstances and calculate exactly the amount you can afford to pay after you deduct household costs e.g. mortgage, utility bills, family groceries and children’s costs. You need to work out how much you can afford to repay towards your loans and you should distribute what you can afford evenly amongst them pro-rata to how much you owe.
6. If you have lost your job you may have to appoint a debt-management company to negotiate to allow you breathing space to clear the debt.
7. Keep a record of everything, including phone calls from both sides. Ideally write to the creditor after agreement is reached by phone to document discussions properly.
8.Don't just handle back keys on the property you cant afford any more. When a property is voluntarily surrendered, the borrower loses control over the sale, added to which the costs of sale (solicitors, auctioneers etc) are generally greater than if the borrower were trying to sell it him/herself. It is also likely that the lender will get less for the house. Thus, what you gain in not incurring legal fees, you may lose in other costs
Showing posts with label Personal Finance. Show all posts
Showing posts with label Personal Finance. Show all posts
Tuesday, March 22, 2011
Friday, May 22, 2009
Getting reach while facing the debt
There is one more aspect of facing the debt problem. One of the famous German financier and coach trainer for personal development Bodo Schefer based on his life experience proposes following solution to the debt problem:
Well, basically it is not a solution but rather question. Where are you going to be or who are you going to be after you paid off all your debt? Simply paying off debt is often not enough. As soon as you finished with all your credits, you would be at the same position as years ago when you started paying off.
Basically the idea is that when you are paying off some amount of money to the various creditors also pay off some amount of money to yourself in order to create safety account. Further on you can either invert that money, or just keep them in bank on deposit account and receive monthly payment. In any case that money will become your security deposit in case of unemployment or illness. You are not just getting rid of the debt but also trying to get rich.
Social help
1) Law consultation http://www.walesco.ie
2) This company helps to manage your debt (basically all steps that are described in book but through agency) http://www.debtrelief.ie/debt-problems
6) The bankruptcy Association of Great Britain and Ireland – 01524 64305
7) Free legal advice http://www.flac.ie/
Course of actions to pay off debt without getting new loan
It turned out that even if you have to pay off every month more than you earn there is still a way how to survive without changing your name and running away to another country (which I don’t think is possible anyway).
It doesn’t matter about the future and how you might get this or that one job. It is now when you cannot afford to repay debt, not what might happen or not at a later date. Don’t make optimistic predictions about the future, deal only with the present. At this point you can do one of two things. You can either let events take their course, which will result in further interest being added until the time of the inevitable country court appearance followed by court costs. Or you can take some actions to stop the process.
1) First you want to start from preparing financial statement. It is very easy, Just put on the piece of paper all your income, min needed monthly expenses (such as food, transport, rent, etc), and all debt payments that needs to be done (make sure you put everything even a small ones, it will help you to see picture in general)
2) Contact all your creditors. You want to ask them to give you: a copy of original credit agreement, the total amount outstanding, what service charges or interest charges are being added each month, the interest rate (if applicable), is there any unemployment or sickness insurance attached to the agreement? (this apply only to loans and credit agreement)
3) After receiving answers, we can now start to make firm offers in an attempt to reduce the debt, or even eliminate it completely. Write offering to repay bills in monthly installments, instead of the full amount outstanding. Be sure that your monthly payment that you are offering to the creditor is the amount that you can actually manage to pay. Even if it is small sum like 5 euro, you don’t want to be seen as not trust worthy when you are not able to pay bigger amount.
4) Write a letter to the companies that gave you loan, asking to freeze interest, making sure the debt does not get any larger. There is no point stretching already tight finances making payments that only just cover interest and service charges, they never actually reducing the overall debt.
5) Your mortgage/rent – there is no reason at all to lose the family home especially, as in most cases, other options are always available. Turn to the Housing Benefit Office, they can help to arrange your monthly payment in terms of housing benefit which cost nothing for you.
6) Contact any other debt collectors you have such as utilities, student loans, credit cards and etc. Remember that most of the credit companies are more interested in receiving their money back rather than taking your possessions (especially now when their market price much lower than it was). Nobody will apply to the court if the amount of money you borrowed is around 200 euro. But if some of the companies want to take your case to the court, there are ways how to survive that situation.
Information provided above is taken from the book by Graham Willmott “Forget debt in 90min”. It is available in central library in Dublin city center. If you have more questions please contact me directly or read the book.
Facing the debt
In recent years, it has been so easy to get involved into debt. Almost everywhere we went; credit companies were trying to convince us to borrow money or buy goods. It felt like there is so much almost free of charge money, and interest rates are very small, and in almost a minute u can join this class of wealthy people by taking some more money in credit. Finance companies and banks have been competing to lend us their money. There were a lot of signs WORRIED ABOUT DEBT? TAKE OUT A LOAN.
Crisis hit with unexpected understanding that money in the world are limited and to get some you actually have to earn them. There was a mixture of strong desire of banks to give us money, so that they didn’t bother with checking credibility of payment; and great desire of people to have more money to spend without deep thinking about possibility of repaying it. (why would anybody bother with such idea, in any case u can take one more loan – suggested credit companies).
With the crisis banks stop giving out so much money and the debts needs to be faced and paid off. How on earth it is possible to do? What if you got redundant and have no more income, should you run into another country and change your name?
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