As a single mother, I have accumulated debt as I have chosen to work part-time to emotionally support my son, especially in the last few years of school.
As a result, my finances are out of control. I have 5 credit cards, some of which have been taken over by collection companies.
My responsibility to my son is now done and I am working full-time.
However, it is a struggle to pay the interest and I simply cannot touch the sides of this debt.
I have looked into a debtor’s agreement which negotiates with each creditor, pays them out then direct debits from my account for five years – $60/wk for a $20K debt. From where I’m sitting, that seems like a great option.
Debtors agreements are one step short of bankruptcy but my friend says that will always show up on my credit rating. My argument is that my credit rating is already shot.
She says I should try for a loan and negotiate with each creditor to pay less if they get a bulk amount to finalise the matter. She used to do this for a living and says she will help.
The difference would be that my credit rating would be bad rather than terrible.
My problem is – who is going to give me a loan? I wouldn’t give me a loan, even though I know I have every intention of using that loan to wipe out interest rates of a debt I’ll never be able to pay off as is.
Should I approach the bank? Credit union? Is there companies in Australia who help people like me?
PS. the debtors agreement was with Fox Symes – anyone have any experience with that arrangement?
Australian answer:
Locate a local financial counsellor. Usually to be found through your local community advice program. They do not charge and they will have the experience and knowledge to assist you sort out this problem. They are sympathetic, not judgemental and will work with you to achieve a repayment program or an achievable goal in regards to your finances.
Debtors arrangements do not show up on your credit file, you are being very responsible in not walking away from the debts.
Don’t despair, I think that the way you are trying to pay off your debts is admirable and reflects your honest character. Good luck and it great that you have supported your son.