MyCRA Specialist Credit Repair Lawyers

Tag: Money Smart

  • Prevent a credit default during a time of mortgage stress.

    mortgage stressMedia Release

    Prevent a credit default during a time of mortgage stress.

    12 February 2013

    For the thousands of Australian home owners who are under financial strain, interest rate cuts may have come too little too late – but a consumer advocate for accurate credit reporting says those families falling behind on mortgage repayments need to be educated about what they can do to try to keep their home and their good credit rating.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says it is vital that when someone is suffering financial hardship of some kind that they open up a dialogue with their Creditors as early as possible.

    “Too many people go into denial about their debts, and this only makes the long term prospects for recovery much worse. If I could give one piece of advice, it would be to talk to your bank and as soon as you encounter difficulties,” Mr Doessel says.

    Despite a recorded decrease in mortgage delinquency rates across the country to 1.2 per cent in September 2012 from 1.6 per cent in March 2012, credit ratings firm Fitch Ratings has recorded some continuing troubled areas where delinquencies remain high.

    Many of these ‘repayment blackspots’ have reportedly been impacted by the global economy through a drop in tourism numbers.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][i]

    Mr Doessel’s credit repair firm deals with many clients who are attempting to salvage their lives and their credit rating after financial hardship, and he says sometimes effective communication and persistence may have prevented defaults.

    “If you are suffering hardship, get on the phone and discuss it with your bank. They may not issue a default on your credit file if you successfully negotiate to put repayments on hold or reduce the repayment amount – as long as you make a firm plan to get back on top of things, and you are able to stick to it,” he says.

    Credit file defaults are issued after credit accounts are 60 days in arrears, and late payment notifications are issued after repayments are one payment cycle late.

    Mr Doessel says the ramifications of having credit file defaults are generally refusal of mainstream credit – including credit cards, store cards and mobile phone plans for the 5 year term of the listing. Too many late payment notations may also impact credit approval.

    “If you are able to borrow, often the interest rate is much, much higher. If your bank can’t contact you, they may even issue you a Clear-out which has a 7 year term,” he says.

    “So you want to avoid having your credit rating black listed if possible.”

    People who need to negotiate with their lender because of hardship issues should now find the process much easier.

    Last year credit reform saw the introduction of changes to procedures for hardship applications. From 1 March 2013, The National Consumer Credit Protection Amendment (Enhancements) Act 2012 takes effect, giving debtors a statutory right to request a hardship variation if they cannot meet their obligations under a credit contract regardless of the amount of credit that is provided under their contract.[ii]

    Tips for Applying For Financial Hardship

    1. SPEAK UP. Firstly, you need to make it clear to your bank that you fear you may fall into arrears on your repayments – especially if you have a situation of temporary difficulty, such as unemployment or illness.

    2. WHAT CAN YOU AFFORD TO PAY? Work out what you can afford to pay prior to requesting a hardship variation. You can get budgeting advice through ASIC’s Money Smart website www.moneysmart.gov.au.

    “This would involve taking the bull by the horns and doing up a serious budget on what’s coming in and what your repayments are on all of your credit accounts,” Mr Doessel says.

    3. BE PRECISE. Put your request in writing and keep a copy as a record. You may need to use the actual words “financial hardship variation” for your lender to officially recognise the request, and to avoid confusion as to what you’re asking for.

    4. KNOW YOUR RIGHTS. Check your loan agreement as to the terms you entered into around financial hardship. Those agreements post-1 July 2010 have a clause which requires the lender to respond to you within 21 days.

    Creditors are legally required to consider a person’s request for variation on payment arrangements, but are not obliged to agree to any hardship variation proposal put forward. If a lender either refuses or fails to respond to your hardship request, you can lodge a complaint with their independent dispute resolution scheme, such as the Ombudsman they are a member of.

    5. DO YOUR RESEARCH. Research how to apply for financial hardship. You can do this through ASIC’s MoneySmart Website, or through sites like Money Help, a website run by the Victorian State Government.

    6. BE CONSISTENT. If you do get a variation on your repayments – keep up all repayments on time every time. And keep an open dialogue with your bank.

    “This fresh chance may be the catalyst to put in place some real changes in how you think about credit – taking a fresh look at ‘things’ ‘wants’ and ‘needs’– and making credit work for you next time instead of the other way around. This doesn’t ensure that mistakes won’t happen with your credit file, but it will ensure that a negative credit listing won’t make its way to your credit file through any fault of yours,” Mr Doessel says.

    /ENDS.

    Please contact:

    Graham Doessel – CEO Ph 3124 7133

    Lisa Brewster – Media Relations media@mycra.com.au

    http://www.mycra.com.au/ 246 Stafford Road, STAFFORD QLD. Ph: 07 3124 7133

    MyCRA Credit Repair is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files.

    ——————————————————————————–

    [i] http://www.news.com.au/realestate/news/australias-mortgage-blackspots/story-fncq3gat-1226570977744#ixzz2KAbn7xXq

    [ii] http://www.asic.gov.au/asic/asic.nsf/byheadline/ASIC+Credit+Reform+Update+-+latest+issue?openDocument http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=LEGISLATION;id=legislation%2Fbills%2Fr4682_third-reps%2F0001;query=Id%3A%22legislation%2Fbills%2Fr4682_third-reps%2F0000%22

    Image: Nutdanai/ www.FreeDigitalPhotos.net[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

  • Flood affected? Ask for help early to protect your credit rating

    flood victimsAs flood and cyclone victims across Queensland and New South Wales start to take stock of their homes and businesses, they may not know that their obligations to lenders still apply unless they take some necessary steps NOW to prevent being defaulted. We look at what flood victims should do to get back on their feet again and in the process, hopefully save their credit file.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.

    Today the Credit Ombudsman COSL has urged lenders to show compassion to flood victims when considering cases of financial hardship.

    Ombudsman Raj Venga says lenders and mortgage managers have previously responded sympathetically to borrowers who have experienced financial stress as a result of natural disasters and hopes they will continue to do so.

    “We expect they will again show the same compassion to affected borrowers in Queensland and northern New South Wales, and take into account COSL’s Position Statement on financial hardship.  We also urge borrowers who may be experiencing financial difficulties as a result of the flooding to contact their lenders or mortgage managers as soon as possible to discuss payment variation options available to them,” he said in Australian Broker today.

    How could I be affected by defaulting on my loan?

    Obviously, if you default on your loan for a certain period of time, you risk the bank taking the home. But even if you default once, but then begin to make up the repayments you are still putting your future at risk.

    If you fail to make repayments on our loan past one payment cycle, you will probably end up with a late payment notation on your credit file. If that extends out to more than 60 days, the bank will list a default on your credit file. Once you have a default against your name – it will stay there for 5 years. The intention of adding default credit listings to credit history is to warn future credit providers you would potentially have trouble keeping up with repayments. Likewise, as part of ‘responsible lending’ it would mean the credit provider would be acting irresponsibly to lend you money – so most don’t.

    A default on your credit file means you have very little access to mainstream credit for the five year term.

    What can I do if I am experiencing mortgage stress due to the storms and or floods?

    Ask for help early!

    The Australian Bankers’ Association (ABA) told Australian Broker banks are already offering a range of emergency relief packages to assist people affected by the severe weather in Queensland and New South Wales.

    Steven Münchenberg, chief executive of the ABA, says:

     “If someone’s home, income or business has been affected by the floods or storms, they should contact their bank as soon as they are able to. Banks are providing support to help their customers get back on their feet.”

    Banks offer a range of support options and the assistance provided will depend on their individual circumstances and needs, but may include:

    ■ deferring home loan repayments;

    ■ restructuring business loans without incurring fees;

    ■ giving credit card holders an emergency credit limit increase;

    ■ providing payment holidays on personal loans or credit cards;

    ■ refinancing loans at a discounted fixed rate;

    ■ waiving interest rate penalties if term deposits are drawn early; and

    ■ deferring repayments on equipment finance facilities.

     “If you are worried about the financial effect of the flooding and storms, talk to your bank about the support that is available. It is often not well understood that banks do offer their customers assistance during these difficult times and go beyond what might be legally required to offer immediate financial relief and support to affected customers and their communities. If you know someone affected, let them know that banks are offering emergency packages,” Mr Münchenberg says.

    “The best way to contact your bank is to speak to your relationship manager or call the bank’s dedicated emergency relief or financial hardship support number. These numbers can be found on the ABA website www.bankers.asn.au or at www.doingittough.info along with additional information to assist people that might be experiencing financial difficulty. You can also speak to a free, independent financial counsellor by calling 1800 007 007.”

    Tips for Applying for financial hardship

    – Work out what you can afford to pay prior to requesting a hardship variation. This would involve taking the bull by the horns and doing up a serious budget on what’s coming in and what your repayments are on all of your credit accounts. The best place to start looking for some help would be ASIC’s MoneySmart Website. If you feel like you’ll struggle across a number of credit areas in the short term – consider requesting a reduced payment for other credit accounts as well.

    – Put your request in writing and keep a copy as a record.

    – You may need to use the actual words “hardship variation” for your lender to officially recognise the request, and to avoid confusion as to what you’re asking for.

    – Check your loan agreement as to the terms you entered into around financial hardship. Those agreements post-1 July 2010 have a clause which requires the lender to respond to you within 21 days.

    – Creditors are legally required to consider a person’s request for variation on payment arrangements, but are not obliged to agree to any hardship variation proposal put forward. If a lender either refuses or fails to respond to your hardship request, you can lodge a complaint with their independent dispute resolution scheme, such as the Ombudsman they are a member of.

    – Research how to apply for financial hardship. You can do this through ASIC’s MoneySmart Website, or through sites like Money Help, a website run by the Victorian State Government.

    Image: khuruzero/ www.FreeDigitalPhotos.net

     

  • 2012: A new year, a new money plan

    5 steps to help clear your debts; clean up your credit file and pave the way for new finance goals in 2012.

    For those of you who have made a New Year’s Resolution in 2012 to get back in control of your finances and reign in all those outstanding debts from last year, you are not alone.

    According to a recent survey by ING Direct, of the two thirds of Australians who will make a New Year’s resolution for 2012, more than half will focus on their finances.

    ING Direct says among those making financial resolutions, 34 per cent resolved to save more in 2012, 24 per cent resolved to reduce their debt, 16 per cent said they intended to take control of their spending and another four per cent said they planned to switch banks in the New Year.

    ING’s Executive Director Brett Morgan says “It’s good to see Australians are focusing on the importance of financial goals for 2012 and there are steps we can take to stay on track with these resolutions throughout the year.”

    “Make sure your resolutions aren’t too big or difficult to achieve. It also helps to quantify your goals – aiming to save $50 each week is a more concrete goal than simply aiming to ‘save more’.”

    So here are five practical, positive steps anyone can take to improve their finances.

    1. Understand your debt.

    Before you can start saving a significant amount, you need to really understand how much you owe. Savingsguide Australia recommends for anyone who has made a New Year’s resolution to get out of consumer debt, they should first tally up everything they owe.

    “Without the big number, however terrifying it is, you won’t be able to start a serious schedule of getting yourself clear of consumer debt,” Savingsguide recommends.

    The good news is – generally with Christmas and New Year celebrations and expenses out of the way – the next month’s credit card statements should automatically look better before you even start.

    2. Make a plan to repay your debt.

    Most people with significant debt generally have it stacked up on a credit card – or cards. Unfortunately most are at high interest rates which make it often impossible to get on top of. Many experts recommend switching all debt to one card with a lower interest rate, or even swapping to a personal loan. But the best advice we can give on credit card debt is to repay above the minimum amount set by the bank – which will allow you to actually make progress on clearing the debt because you will be saving interest.

    If you continue to have multiple cards, the Government’s Money Smart website has these recommendations:

    Dealing with multiple credit cards

    Got more than one credit card? Step your way to credit card freedom and feel the stress go away.

    Step 1: Keep up your repayments
    Pay off as much you can on the total amount owing on the main credit card you are using each month. This will let you take advantage of any interest-free period and help you pay off the whole debt (not just the interest, fees and charges).

    Step 2: Pay the smallest debt or highest interest rate
    Choose one of the two strategies below:
    Pay off the smallest debt first – Continue making minimum payments on all cards but aim to clear the one with the smallest debt first. Then work on paying off the next smallest debt, and so on. You will reduce the risk of incurring multiple charges for late or missed payments and save on annual fees. The money you save can be used to pay off other debts.
    Pay off the card with the highest interest rate first– Continue making minimum payments on all cards but pay off the credit card with the highest interest rate first, then work your way through your other cards. This may save you money on interest payments.

    Step 3: Close the account as you clear each card
    Whatever option you choose, stop using all but one of your credit cards (and try to only use it for emergencies). As you clear each card, cut it up and close the account. If you don’t, you may still have to pay fees on the account, even if you aren’t using it.

    Step 4: Lower the limit on your last card
    Finally, lower the limit on your last credit card to an amount that you can repay within 3 months, say $2,000.

    3. Be more aware of what you are spending.

    Make a resolution to not bury your head in the sand about bills. Pay them straight away if you can or diarise their repayment. Read all of your bank and credit card statements when they come in. While you are attempting to implement the new savings pattern, read and keep all of your receipts.

    If you are not particularly organised – you may even like to resort to the ‘shoebox method’ – which is basically keeping every receipt for the week or month in a shoebox, and transferring it after that time onto a spreadsheet which allows you to track your spending and gives more focus to where you might be blowing out your budget.

    You may find after reviewing your spending you can see where you are wasting money. Maybe taking lunch to work or eating out less can make a significant dent in your spending – or perhaps just skimping on all those takeaway coffees will give you enough extra money that you can squirrel away.

    4. Commit to savings.

    Savingsguide’s Must Do Moves for 2012 include striving to save 20 percent of your income, albeit after repayments are made on existing debt. They also advise setting up a separate savings account which can’t be accessed easily.

    “Look for an account with a high interest rate and rewards for accounts that don’t have withdrawals,” they recommend. “Set up automatic deductions, and don’t touch it.”

    5. Clear your credit file of errors.

    There is no point making a significant dent in your consumer debt and saving regularly if you are unable to make use of your new found financial prowess. Many people find they do all the hard work of saving towards a home or car loan, only to find their past comes back to haunt them.

    They may apply for a loan, only to be refused due to credit file defaults which show up on their credit report. Basically any creditor is able to place a default on a person’s credit file if a repayment is later than 60 days. There may be times when this has occurred and you are unaware of it.

    Whatever the situation, credit file defaults need to be treated very seriously. They are most times an instant negative for any bank who is thinking of lending you money. And the thing is…they hang around for 5 years. What are your financial goals 5 years from now????

    It is good financial practice to get a copy of your credit report each year, and make sure everything is as it should be. This report is FREE every year from the credit reporting agencies. You may have listings with one or more of the credit reporting agencies.

    There is a potential for errors to be present on your credit report.

    Credit reporting mistakes do happen, but the watchdog is YOU!

    If a default has been listed ‘unlawfully’ you have the right to request its removal from or amendment of your credit file.

    Many people get the run around from creditors when they try to do this – or they get bogged down in all the legalities. Unfortunately the potential is there to ruin your chances of getting the default removed if it is not handled the right way. We suggest you get a credit repairer on the case, they know the legislation and can work within it to force creditors to honour their obligations under Australian law and negotiate the removal of any errors from your credit report.

    Visit MyCRA’s main site www.mycra.com.au for more information.

    Image: digitalart/ FreeDigitalphotos.net

    Image: tungphoto/ FreeDigitalphotos.net