Honest Realestate Agent

Posts Tagged ‘debt management’

If you have been having trouble with debt consolidation on your own, maybe it’s time to call in a pro.  Whether you have fallen behind on card bills, medical costs that insurance did not pay, or find yourself having difficulty paying for resources as a consequence of job loss, there are debt management programs that will help you.  

Don’t feel ashamed to contact someone for help with your financial affairs.  Many folk have been in the same position that you are at present in, and have conquered finance issues with a little bit of help.  If you are concerned about the cost of such a service, please keep in mind that some specific Debt Management and Credit Counseling corporations are not for profit and regularly do counseling for nothing.  

The very first thing that you’ll have to do is fill out an application.  The application will ask you what kind of obligations you owe (are they a consequence of student loans, mortgages, and so on) and the sum you owe for each.  Then, a company representative will contact you and let you know what they can do to help.  Often this may include a reduction of your debt from thirty to seventy percent!  It’s a brilliant idea to analyze a few different companies to see where you will get the best deals, re share of reduction, as well as rates on the balance.  

Debt handling programs help you by fundamentally purchasing your unpaid debts from the firms you owe them to.  Then, they consolidate all of the bills into one payment for you.  Next, they will try to strike a deal to cut as much money out of the debt as possible .  This will be based mostly on what you are able to afford to pay them per month, as well as how long it’ll take you to repay the balance.  You can sometimes select a payment schedule of between 9 months and 2 years, infrequently more.  

The sooner you can pay off the debt, the better.  However, debt control programs won’t take all of the money you have, leaving you to scrounge for food each month.  They will work a comfortable repayment plan out, where you will continue to be able to put away funds into a high-interest account or whatever you deem mandatory.  With debt management programs, you’ll be back on your fiscal feet before long.

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You can’t get approved for debt management, if you do not already have good credit. If you’ve already defaulted on payments, don’t count on getting the loan. It should be obvious why this is so. Typically, banks and other lenders will consider this type of borrower far too risky, since they could be potentially problematic in future. Because most lenders have already had problems with bad loans, they are far more likely to exercise caution when lending to someone with bad credit.

It’s pretty safe to say that these individuals find themselves in their circumstances because of late payments. But a good portion of these people are actually trying to get new loans to help repay their already existing debts. And by effectively managing a new loan, many of these individuals actually can get out of the debt trap. Having a lot of debt can be very frustrating. But getting a loan with low rates to help pay off your debts is still often possible even with bad credit. And as we all know, not having any debt can help you to start a new life all over again.

If you’re thinking about mortgage rates you obviously also have to have good credit. Someone with poor credit will probably have to take a hard money mortgage loan if they expect a lender to give them money. To avoid that, you can apply for some form of debt consolidation services in plenty of time to clear up your credit before you apply for a mortgage. That will give you the opportunity to clear up any outstanding debts and demonstrate responsible payment practices. This will show lenders that you’re capable of being responsible and paying back your loan within the agreed-upon time. We all deserve second chances, it just takes a little more work and focus than if you have never had financial problems. But don’t worry, using common sense and acting responsibly will restore your credit eventually.

During times of economic downturn, people typically are confronted with difficult times. Could debt management and financial planning help? For those who can’t pay their debts, financial help can be of assistance, since they often use a home budget calculator to help people decide which way to turn financially.

Those that implement a debt management plan do so by using a management organization that will talk to creditors for them and works to reduce the monthly payments to something that is a little more reasonable for the client to pay. To help get payments progressing, the organization will often ask the lender freeze or reduce charges and interest. Lenders, though, are not legally bound to make any changes to the original contract made by the borrower. That’s why negotiating with lenders is often necessary for debt management, which means being able to explain why the individual couldn’t make their scheduled payments as originally agreed.

Because of the limited credit availability, it’s getting harder today for many people to keep control of their debts through consolidation. Also, Nationwide reports that home prices are were down 15 percent in July 2009 from their October 2007 peak. So many homeowners will not get relief through remortgaging. There is a bright side, however, because debt management doesn’t rely on increases in home prices or higher credit, since they’re not influenced by changes in home prices or credit markets – the kinds of changes that can make other forms of debt reform difficult or expensive to get. Does this mean that debt management is a solution for everyone? No, debt management isn’t the answer for everyone. To begin with, there are those who will not be eligible for debt management, like people are currently able to make their monthly payments.

Important financial and debt management pointers:

* Someone who doesn’t make the payments they agreed to (called defaulting), whether they are on a plan or not, will hurt their credit score for several years and possibly make credit more expensive and harder to obtain during those years.

* A borrower can actually pay far more to lenders in the form of interest if he agrees to pay down debts over an extended period of time.

Repossession of your House – one of the most traumatic events in any person’s life.

In the current economic climate it is distinctly possible that even somebody who is very careful with money can fall on hard times.

The bond repayment that was well within your reach when you bought the house has now become a commitment that you cannot manage – because of rising interest rates, and the price of fuel, food and other essential items.

Irrespective of the reason why you have stopped paying your mortgage – redundancy, death of the breadwinner, divorce, failed business venture, inability to refinance and many more – the bank will take action as soon as mortgage payments are not kept up to date, and will repossess your house if they feel you are unable to meet your monthly repayments presently or in the future.

What a wonderful relief it would be if you could go to bed again at night and fall asleep without this sword hanging over your head everyday.

The good news is that we can prevent the repossession of your house, if you are willing to work with us.

There are, however, a few things that you must understand beforehand:

The biggest mistake that property owners make who cannot meet their bond payments, is not to contact the bank in good time, but wait until the bank contacts them first. Many property owners then ignore the bank’s calls and letters.

Now alarm bells will ring at the bank immediately! If you see that you will not be able to make any month’s payment, you must contact the bank, explain your situation, and make an appointment to see them. It is in the bank’s interest to find a solution to the problem.

There are various possible solutions – each person’s situation is unique:

The bank may give you a payment ‘holiday’ until your situation has improved – like 6 months of paying only half the monthly amount, or 3 months of making no payments, depending on your personal situation.

You could extent your mortgage payback period to 30 years, or apply for an interest only mortgage (SA Homeloans, for instance offers interest only mortgages) which will bring your monthly payments down. This will give you more cash in hand, but you will be paying more interest. You could change the mortgage repayment again after reorganising your finances.

Your accountant or financial advisor could give you financial advice (NOT an insurance broker!). They have seen situations like this before and might give you feasible ideas that can be implemented.

The consequences of not keeping up with your mortgage payments:

The bank will repossess your property if you do not keep up with your monthly payments, and do not communicate with them to find a solution. If a solution cannot be found, the bank will take steps to have the property repossessed.

Some people give up and wait for the bank to do the repossession. They think that all their financial worries will be over after the bank has repossessed the house – but as soon as your house has been repossessed, all your creditors will be knocking on your door.

Someone who has gone through repossession might be financially ruined for a very long time, because he will not be able to get credit.

When the house has been repossessed, the Sheriff will auction it. The bank will send an official to also bid at this auction. If the property is worth $1 000 000, for instance, and the outstanding bond is $500 000, the bank will bid at the auction up to a price of $500 000, and then leave the auction. If the bid is granted at $500 000, the bank will get their outstanding money back.

Don’t think you will get any money back after the auction, you might still be owing the bank. Many auctions do not go much higher than the reserve price that the bank has asked for. Now the owner has no house PLUS a bad credit record. He may not be able to get credit for a long time (talking in years!), and struggle to rebuild his life.

How we can help and assist you

The best action to take to prevent repossession is to sell the property to a reputable property investor and settle all outstanding debts as soon as possible. The property owner might have some late payments listed on his credit file – but not a repossession that might take years to repair or clear. He can rebuild his life again by starting afresh, and may soon be able to buy a property again.

We are property investors who will valuate your property and give you an offer to purchase within days. We will even settle your outstanding payments with the bank before the transfer has taken place. So you will not have to worry about a creditor every time the phone rings; or that the Sheriff will come knocking on your door.

Thanks to the NCA (New Credit Act) there is another way to save your house and that is Debt Counselling.

You can apply for Debt Counselling at any time. As long as your income is lower than your expenses and you have a regular income every month. While you are in debt counselling or applying for debt counselling the bank may not repossess your property or any other asset in your name. This will give you more time to reorganise your finances.

Our Criteria:

We are not able to help everyone. There are certain criteria according to which we can help you:

We must be your last resort, and you must be willing to work with us. First of all we must valuate your property to see if you have enough equity in it. Equity is the difference between the market value of your property and your outstanding bond. Should you meet the criteria, we will make you an offer up to 70% of the property market value.

We can also help with fast sales in cases where people are relocating abroad, or have been divorced or separated.

Applying for debt review is a simple process. You can send me an email to help you apply for debt counselling or you can contact me for more information on debt counselling.

Contact Colin Brazendale at colin@prevent-repossession.co.za for support and help.