The best approach to deal with this debt problem is to meet it head on. When a debt collector contacts you, they need to know 2 things:

1. When are you going to pay?
2. How much are you going to pay?

For the person in debt, the reason for not being able to pay the bill is the most important thing however its fair to say that some debt collectors are apathetic. From their point of view they’ve heard every story imaginable from there being a death in the family, a car accident, sudden unemployment etc. This being the case it’s easy to see how a debt collector can become desensitised and/or sceptical.

When you receive a call from a debt collector, be prepared and stay calm. Never promise to pay an amount of money that you can’t afford. If you make a promise you can’t keep (just to get them off the phone), you will run the risk of the matter escalating.

Being prepared also means you should know your rights. There are laws to protect people from being intimidated or threatened by debt collectors. Also debt collectors have designated times to call and limitations on how often they can call you. Debt Fix has previously written articles about these laws in addition to some great Government websites detailing debt collection practices and consumer rights. One website in particular that has a wealth of information is www.fido.gov.au.

Debt collectors can often be abrupt and rude and it’s easy to understand how the relationship can break down. Despite this, it’s important to try to keep the relationship as positive as possible. If this is impossible, and the relationship breaks down, it may be necessary to seek the help of a Debt Management company like Debt Fix to act on your behalf. Debt Fix specialises in bridging the gap between people with unmanageable debts and their creditors.

Debt Fix is a company committed to helping people resolve their debt crisis. Contact Debt Fix today on 1300 332 834 or www.debtfix.com.au and you will be on your way to being debt free.

About the Author:
Nicholas Bregozzo is a personal debt management specialist and has advised people who have personal debt problems since 2000. During this period he has helped 1000s of people manage their debts and avoid Bankruptcy. Currently he works for Debt Fix with the objective of providing clear impartial advice and solutions for people in serious debt.

But what should you do if you’re left a little short one week and you can’t pay your credit card on time? The answer is simple: tell your credit card company about the situation before the bill is due. If you don’t, you may find that it will cost you. When you speak with your credit card company, tell them the issue and why the bill will not be paid on time. It’s important to stay calm and let them know that you want to pay the bill and would if it had not been for the unexpected expense. The person on the other end of the phone should understand your predicament, because they hear this sort of thing all the time.

Tell them when you will bring the account back into order and ask them if there is any penalty for paying late. Some companies charge late fees, penalties and/or higher interested, if this is the case, ask them if they would waive the penalty charges – you never know unless you ask!! This is all well and good if the reason for being unable to pay your credit card on time is just a small, unexpected expense.

What happens though if the reason you cant pay your credit card due to something more serious, and it’s unlikely you will be able to come to a suitable arrangement with your credit card company? It might be that you’ve lost your job or your relationship with your partner has broken down or there has been a death in the family.

These sorts of situations happen and it’s important to know exactly what to do in such a circumstance. The first thing you should do is contact your credit card company as previously mentioned, and explain the issue to them. Explain to them what the circumstances are and how it will affect your ability to pay the debt. Ask them if they can offer any solution to help you in your time of crisis.

They might suggest you borrow money from friends and family or somehow refinance the debt. Whilst this approach is possible in some instances, for many this option is simply not available. In situations where refinancing the debt is possible, its essential that the new repayments are less than the repayments required under the existing contract, otherwise there is no benefit.

There are companies and organisations that specialise in helping people struggling with debt. There are many free government websites that offer terrific advice regarding debt management, budgeting and understanding your rights as a consumer. Its important to get as much information as you can about managing debts and speak to trusted experts.

Debt Fix offers people a wide range of solutions and helps hundreds of people in this same situation. Whilst there are many other companies that purport the same, very few can offer the “No Fix, No Pay” guarantee that Debt Fix is proud of. In other words, if Debt Fix can’t find a solution, then it’s clients will not be charged. This way, Debt Fix clients can be confident they are dealing with trusted professionals.

Responsible debt management starts with knowing and understanding your exact financial position. It’s vital to have a clear understanding of your income and expenses. Naturally, the aim is to maximise the income and keep expenses to a minimum. In this regard, a budget will help track and keep spending in check as well as highlighting arrears where savings could potentially be made.

But how much is too much debt? Is there an exact way to measure whether or not you are holding too much debt? The answer is yes and it’ called the debt-to-income ratio.

To calculate your debt-to-income ratio, all you need to do is add up what you spend on a monthly basis towards your bad debt, and then divide it by your monthly income. To turn that figure into a percentage, multiply that figure by 100. The lower the percentage, the better. In previous articles we talked about the difference between good (equity) debt and bad (consumer) debt. A bad debt ratio above 10% is too high.

Once you have determined your debt position and decided to improve it, the next step is to review and address and budget issues that may exist. Debt Fix has many free tools and calculators including a useful budget planner to help inn this process.

After this, if the debts are still too high and there is no way income can be improved or savings made in the budget, it’ important to look at other options. For people with unmanageable debt, believe it or not there are many solutions available. The most important thing is that if you need to speak with someone about improving your situation then they should be an expert like an accountant, financial advisor or a company like Debt Fix.

As stated before and in other articles, there are many options available to people struggling with debt. Each option has it’s pro’s and con’s and its hard to know what is best approach. The answer to this question is easier than you might think. The right solution for you is the one where you are satisfied with the benefits and comfortable with the consequences.

In this way, before you make any decision, you need to be informed and have a clear understanding of the options. Taking control of the situation may sound like hard work, but it will lead to a better financial position and ultimately relieve stress.

For a lot of people feeling the pressure of debt and paying high interest rates, refinancing is a way to unlock the accumulated wealth in order to relieve the burden of debt.

Everyone’s situation is different and for this reason it’s important to go with a company that’s experienced. Whilst there are a lot of mortgage brokers out there, there are only a few companies that specialise in helping people with serious debt problems refinance their properties to consolidate debts.

Companies like Debt Fix for example, have helped hundreds of people where others have been unable to – simply because they specialise in mortgage refinancing and debt consolidation.

A good example is when Debt Fix spoke with the clients creditor’s and negotiated reduced settlements, then refinanced the client’s property to consolidate the debts under one loan – despite the client receiving eviction papers three weeks before. The client was able to keep the family home and saved literally thousands of dollars in interest payments and fees, not to mention reducing the client’s overall debt position.

Also, a reputable company will always make you aware of all the costs associated with refinancing and make sure there is a benefit to you before proceeding. Exit fees, differed establishment fees, stamp duty, legal and valuation fees are all factors that must be considered and explained.

So if you’re thinking about restructuring your debts into a more manageable format with improved interest and less stress, refinancing may provide the solution you’re looking for.

Before you speak with anyone about regaining control of the situation, it’s important to know exactly what the situation is. For instance, it’s important to know exactly what your income is (wages, Centrelink, child support etc) and what your costs are (accommodation, food and groceries, transport etc). Then you need to know exactly how much you owe and who you owe money to.

Believe it or not, there are many options available for you to consider and Debt Consolidation is just one of those options.

It’s really common for people to have different credit cards from different companies, old phone bills from previous suppliers and personal loans from different credit providers – so no wonder things can get confusing.

Debt Consolidation can be the answer because it collects all your bad debt under one single payment. As an affordable and practical way to handle bad debt, it can save a lot of confusion, time and of course money.

There are many ways to consolidate debts, so it’s important to speak with an expert company that specialises in debt consolidation. In Australia, there are many companies that claim to be experts in debt consolidation, and it can be a minefield. It’s important to ask questions like “If it turns out that you can’t help me, will I have to pay you anything?” because there are some companies that will charge you huge fees for doing nothing.

Debt Companies that spend enormous amounts of money on TV and internet advertising have to get the money from somewhere to pay for that, and more common than not its comes from people that they couldn’t help.

Other companies like Debt Fix for example, have a “No Fix, No Pay” Policy when it comes to debt solutions and Debt Consolidation. So if you’re struggling to regain control of your bad debts and you need to consolidate your debts, make sure you get expert advice from a trusted company.

When you consolidate your debts, you combine several small debts into one. One of the most common ways to do this is through a loan. Most banks offer such loans believing that one payment would be more convenient and easier and cheaper to manage.

Even though this may be the case, a debt consolidation loan also comes at a price. Whilst you may take the pressure off individual accounts, you still have to pay interest and service charges. Also, its important to cancel the lines of credit or other credit facilities or risk accruing greater levels of debt i.e. having available lines of credit presents a artificial feeling of wealth that can lead to financial peril.

In this way, the consolidation loan should be used to break the cycle of spending. If you continue to spend more than you earn after a you consolidate your debts, the consolidation loan is purely a cosmetic, short-term solution.

If you are adamant that a consolidation loan is the right thing for you and you are committed to breaking the cycle of spending, then the most important consideration is the interest rate. You need to make sure the new interest rate, including fees and other costs, is significantly lower than the combined total of all the debts you’re consolidating. If its not and you are paying higher interest, then it’s likely you will make the problem worse.

Another potential financial hazard of debt consolidation loans is the threat of hidden costs. Personal loans sometimes attract penalties or costs if you pay them off early. For this reason, its important that these costs are also considered when weighing up the benefits of a consolidation loan. Other costs may include application fees and other charges, especially if the new loan is secured against your assets, which means you may have to pay for applying, legal work, valuation and stamp duty.

If this is the case, and your unsecured debt is turned into a secured debt with a lien over the family home, then there is additional risk and the family home could potentially be jeopardised.

Notwithstanding these issues, when you get a consolidation loan you still need to exercise a disciplined approach to paying off the loan. If you struggle in this regard, and core reason for finding yourself in debt is due to the fact that you struggle to pay your manage your finances, then a consolidation loan may not be the best solution for you as it does not attend to the core of the issue i.e. efficiently managing your budget.

In our sophisticated age of internet technology and advanced banking, it can still be a struggle on occasion to manage our personal finances. There has to be an easier way, right?

If you want to manage debt more effectively, you need to know exactly what your personal outgoings are on a weekly / monthly basis and how that fits in with your budget. Being aware of the outgoings and knowing exactly where your hard earned dollar is spent is one of the key steps to taking control of your personal financial position.

To this end, a lot of people turn to debt consolidation as a solution to simplify things.

Debt consolidation may come in a number of forms, the most popular being a debt consolidation loan. Simply put, a debt consolidation loan brings together all the unsecured debts (credit cards, personal loans) into one onsolidated loan repayment.

This means that instead of paying several small payments, you would pay one big payment. The theory is that if all the debts were brought together into one payment, it would save time and money.

There is no doubt that debt consolidation is more convenient, after all it’s much easier to pay one big payment instead of several little ones. Also, if debt consolidation helps make a budget more predictable in the sense that it’s much easier to plan for and therefore remember.

The Pitfalls of Debt Consolidation Loans

Debt consolidation loans in theory represent a better way to take control of debt because they make budgeting easier, but there are some points before you agree to undertake a debt consolidation loan.

Before any debt consolidation is considered, it’s important to know exactly your current debt commitments. You need to know exactly what your creditors are requesting under the existing contracts and then compare that to what you would be required to pay under a debt consolidation loan.

It stands to reason that if you had to pay more money to service the debt consolidation loan in comparison to what you are paying under the existing debt contracts, then a debt consolidation loan may not be the best idea.

The reason for this is that any solution must provide you with a benefit, and if the financial benefits of the existing debt contracts outweigh any benefits that a debt consolidation loan may provide, it may not be the best idea.

Also in Australia, debt consolidation loans are not easy to get if you are credit impaired, have limited assets and questionable serviceability. The ironic thing is that if you meet this profile, you may be the one most in need of a debt solution.

Finally, debt consolidation loans are only beneficial if they form part of an over plan to regain control of your personal finances. Debt consolidation loans are only effective if all the other lines of credit are cancelled, once the balances are transferred.

Unfortunately, it’s really common for people to leave the credit cards open and available to use after a debt consolidation loan, and when this happens it’s likely that the credit cards will continue to be used. If this happens, you could end up with double the debt that you had before.

In summary, debt consolidation loans can be a very powerful tool in the battle against personal debt, but there are some very definite pitfalls. As long as you are aware of the benefits and consequences of a debt consolidation loan, you are able to make an informed decision whether this is the best, cheapest and most effective way to take control of your finances.

Applying for a loan, depending on the circumstances, is often very stressful. Loans are generally approved after your credit file and ability to service the loan are assessed. In cases where a loan application cannot stand on its own merits, a credit provider will often suggest a guarantor is put forward to secure the loan. When this happens, it’s not uncommon for the guarantor to be a relative or a friend of the primary applicant. In these circumstances, it’s very important to think long and hard before you agree to act as a guarantor because acting as a guarantor comes with a swag of responsibilities.

As a guarantor, if the loan falls into arrears you may be called upon to take over the payments. Clearly this situation is especially dangerous for the guarantor – especially if the guarantor is unable to afford the repayments. As previously stated, the guarantor is usually a friend or a family member so when they are approached to act as a guarantor, it’s very difficult to say no. The family member or friend naturally wants to be supportive and the loan applicant has every intention of paying the loan.

Despite the loan applicant’s best intentions though, situations and circumstances change and there is no way anyone could give absolute assurance that they will be able to service the debt, no matter what. For instance, changes in employment, relationship breakdowns, injury or accidents, health issues and any sudden increase in costs will place pressure on anyone trying to service debt. It’s important therefore to really consider the consequences of acting as a guarantor before you agree to do so. Saying no to becoming a guarantor is far easier said than done so if you are ever asked to act as a guarantor, it’s best to be upfront and honest in the first instance.