Jun 24

Australian BANKRUPTCY laws were modernized under legislation passed by the Senate, as a growing number of Australians get into financial strife through consumer debt.  The change was introduced to reduce the number of consumer bankruptcies declared for minor debts.

There was an 11 per cent increase in personal bankruptcies during 2008-2009, according to the Federal Government.

Most non-business bankruptcies involved consumer debt.

Labor’s amended draft laws raise the minimum amount on which a creditor can petition for bankruptcy from $2000 to $5000.

Originally, the amount was $10,000 but the Government successfully moved to reduce the figure.

The legislation also works at ensuring that the value of bankrupt estates aren’t unnecessarily diminished by fees charged for their administration.

Labor parliamentary secretary Ursula Stephens thanked the coalition for its support of the non-controversial bill.

”(It will) provide debtors with overwhelming debts a realistic opportunity to obtain advice and consider all options before contemplating bankruptcy,” she told parliament.

The Bankruptcy Legislation Amendment Bill 2009 now goes back to the lower house, where the Government holds the numbers to pass this amendment swiftly.

Jun 16

According to a recent report released by MWE Consulting, Amex and Diners are becoming more popular amongst credit card users with these 2 cards combined having almost 20% share of the credit card market during April 2010.

That share has climbed from 15.7 per cent in April 2007 and from 18.8 per cent a year ago.

MWE Consulting principal Mike Ebstein said: “Companion cards are clearly making their mark in the Australian credit card market.” People seem to move away from Visa and Master cards to Diners and Amex.

The big four banks all offer their credit card customers a package that includes Visa or Master plus Amex. The two cards operate one credit card account, are covered by a single annual fee and points go into one awards account.

The rationale for companion card packages is that a Visa or MasterCard offers the consumer wide acceptance, while Amex sits outside interchange pricing regulation and can charge higher merchant fees and pass that on to consumers in the form of higher rewards.

Commonwealth Bank and Westpac offer three points per dollar spent on their Platinum Amex cards. Visa and MasterCard rewards deals are usually one point for each dollar spent.

The latest figures show that the recovery in credit and charge card spend in March was short-lived. Total spend rose 15 per cent to $20.9 billion in March but fell back to $17.9 billion in April.

Jun 15

According to the Bank of International Settlements, the  current European sovereign debt crisis is shaping up as a repeat of the US subprime mortgage debt meltdown.

The Swiss-based Bank of International Settlements believes that the wild swings in markets over the past three months had been caused by a global loss of investor confidence,  and is reminiscent of the events in the US

“The swift reversal in market confidence evokes painful memories of (the northern) autumn 2008, when the collapse of Lehman Brothers brought money and capital markets to a virtual standstill,” the bank said in its quarterly review of world financial markets, released yesterday.

The bank is concerned about the safety of other European banks as they are finding it harder to get access to US dollars.

BIS said Australia had been caught up in the turmoil with investors selling what they believed were risky assets, including the Australian dollar, which has fallen from US91.23c to US85.71c in the past three months. Australian stocks are down just over 10 per cent from the 18-month highs reached in mid-April.

The bank said investor nervousness was overwhelming positive developments in the economy. “Market participants focused on the deteriorating financial market conditions while often ignoring positive macro-economic news.” It cited US sharemarkets falling by 1.5 per cent following the release of surprisingly good employment figures.

Jun 7

There are a number of professional businesses advertising on the internet who specialize is assisting people to negotiate their debts.  While this can certainly take a lot of pressure off, it does have a cost.  If you are confident and understand the process of debt negotiation you could attempt to negotiate your debts on your own

So what is Debt Negotiation About?

Debt Negotiation is about obtaining agreement from your creditor that they will accept a smaller amount than your outstanding debt in full settlement of that debt.

So why would a company accept less money than they are owed? The answer is simple—a credit card company would rather have some of  your outstanding debt in cash than risk having you go bankrupt in which case they may get nothing at all.

The credit card companies know that there is always a risk that you won’t pay back your debt— they view your account as a potential liability. Once you explain that you may not be able to pay back your debt, the credit card companies will quickly negotiate with you to get as much as they can because they cannot be certain that you won’t go bankrupt.

Negotiate a Lower Interest Rate on Your Cards

In the case that you do not have the cash on hand to pay off even a smaller amount right now, you can also try to negotiate the interest rate on your debt. Again, simply gather together the phone numbers of your creditors and give them a call. While it may be surprising at first, credit card companies will often lower your interest rate if your account is in good standing.

The following will increase your chances of negotiating an interest rate reduction:

  • You always make your payments on time and are never late;
  • You frequently make larger payments beyond the minimum set payments;
  • You have a clean credit history;
  • This is the first time you have approached the credit card provider for a rate reduction.
Jun 1

If you are a home owner, one of the cheapest forms of debt consolidation you can have is by consolidation your debts into your mortgage.

What can I do if I am not a home owner?

Essentially your available options largely depend on your credit history.  If your credit history is clean it may be a good idea to apply for either a personal loan for debt consolidation or a credit card with an interest free period for balance rollovers.  Which of the 2 options is better will depend on your personal circumstances.

If your credit history is tarnished you will not be able to qualify for either a personal loan or a credit card.  If you are not a home owner your options are quite limited.  One of these would be an informal debt agreement that you could negotiate with some of your debtors to alleviate the repayment burden for a period of time.  Alternatively you could consider a Formal Debt Agreement, also known as a Part 9 Agreement.  Part 9 is an option under the Australian Bankruptcy Act and facilitates a formal agreement with debtors to allow a reduced affordable interest free repayment plan.