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Beating Credit Card Debt
Credit card debt is crippling many families in Australia, in fact many Australians are simply swimming in debt. Are you one of those people? With a home mortgage loan, a car loan, store cards and credit cards? If you are then you are probably struggling each month to make your minimum repayments, let alone get ahead with any kind of savings plan.
While your mortgage and your car loan are positive steps in the right direction - after all - you are building equity in good solid assets, it is the store cards and credit cards which will give you the most trouble. And what if you are already in trouble? What can you do to reduce and even eliminate your credit card debt?
There are two keys options to doing this.
The first is taking out a debt consolidation loan. This is where you take the balances of your outstanding cards and smaller finance loans and roll them into one loan or card. This minimizes your monthly repayments but also minimizes the amount of interest that you are incurring each month because you are incurring interest only on one outstanding balance rather than many.
The second is taking out a Part IX Debt Agreement. A Part IX Debt Agreement is a simple strategy that allows you to negotiate a binding payment compromise with the companies you owe outstanding monies to. This is an alterative step prior to filing for bankruptcy and should be considered as an extreme measure. It is important to note however that the debt agreement proposal may be accepted or rejected by creditors. Some examples of the kinds of arrangements that are put in place are:
• Payment of less than the full amount of all or any of the debtor's debts,
• A moratorium on payment of debts for a period of time to give the debtor time to gather funds,
• A transfer of property from the debtor to the creditor as full or part payment, and
• Periodic payments of amounts out of the debtor's income to creditors either collectively or individually.
