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Debt agreements, what are they, and when should we consider one? · She's On The Money

0:00
Speaker 1: She's on the Money. She's on the Money.
0:26
Speaker 2: Hello, and welcome to She's on the Money, the podcast
0:29
Speaker 2: for millennials who want financial freedom. Dead agreements? What are they?
0:34
Speaker 2: What are their implications and are they a good idea?
0:37
Speaker 2: My name is Georgia King, and joining me to get
0:40
Speaker 2: to the bottom of it all is financial advisor Victoria
0:43
Speaker 2: Divine V.
0:45
Speaker 3: Good day, Melady.
0:46
Speaker 2: Hello.
0:47
Speaker 3: That felt really strange to say. I just took one
0:50
Speaker 3: of your terms and decided to.
0:52
Speaker 2: Try it, do you say, milady, Yeah, thank you for
0:55
Speaker 2: doing a little nod to ge'z to the g vernacular.
0:59
Speaker 2: I enjoy it.
1:00
Speaker 3: Won't happen again. Really uncomfortable coming out of my mill,
1:03
Speaker 3: but thank you. Let's get on with the episode.
1:05
Speaker 2: Jeorge, I loved. I loved. What is a dead agreement?
1:10
Speaker 2: All right?
1:10
Speaker 3: So a dead agreement is exactly what it sounds like.
1:14
Speaker 3: It is a legally binding agreement that can actually help
1:16
Speaker 3: you settle your debts without having to go bankrupt, which
1:21
Speaker 3: is a good outcome if you have to consider bankruptcy,
1:24
Speaker 3: because as much as we've done an episode on bankruptcy before,
1:27
Speaker 3: it's not something that you do lightly like it would
1:30
Speaker 3: be a last option to get out of a sticky
1:32
Speaker 3: situation that you know you can't get out of in
1:35
Speaker 3: any other way. So it's really important to remember that
1:39
Speaker 3: there's not all that much that is sexy about bankruptcy.
1:42
Speaker 3: And I think that, you know, as the She's on
1:45
Speaker 3: the money person, I get a lot of DMS about it,
1:48
Speaker 3: and I feel like there's still this misconception that it's
1:52
Speaker 3: just really easy, like you just go bankrupt ry, like
1:54
Speaker 3: I've racked up all this debt, I'll just go bankrupt Like, No,
1:58
Speaker 3: that is not the case. Please listen to that episode.
2:01
Speaker 3: So a debt agreement is also not a debt consolidation agreement,
2:06
Speaker 3: which we've also spoken about on the podcast before, albeit
2:09
Speaker 3: it does sound similar. So basically, g with a debt agreement,
2:14
Speaker 3: you negotiate to pay a portion of your combined debt
2:17
Speaker 3: off over a period of time, and you work with
2:20
Speaker 3: a debt agreement administrator who is a legitimate person who
2:24
Speaker 3: will liaise between both you and your creditors. You have
2:27
Speaker 3: to make sure that everybody's hunky dorian really happy with
2:30
Speaker 3: the process and it works. But essentially you do this
2:33
Speaker 3: when you can't pay back the full debt, so you
2:35
Speaker 3: need to come to an agreement and you go look,
2:37
Speaker 3: and there's no way I'm paying that back. What can
2:39
Speaker 3: I pay back? What would be reasonable. Let's have a
2:42
Speaker 3: new agreement so that I pay you back, I don't
2:45
Speaker 3: have to go bankrupt and you actually get your money.
2:48
Speaker 3: Because often when somebody does go bankrupt, if they literally
2:51
Speaker 3: have nothing, that creditor is not going to win like
2:54
Speaker 3: they don't get anything. So creditors are much more likely
2:58
Speaker 3: to want to enter into a debt agreement with you,
3:01
Speaker 3: even if it means they end up with less money,
3:03
Speaker 3: because it's better than ending up with no money.
3:05
Speaker 2: G Yeah, so they still get some exactly. Sorry, you
3:09
Speaker 2: really threw me there when you said hunky dory.
3:11
Speaker 3: I'm just trying to be more relatable. Georgia very hip.
3:15
Speaker 2: We loved it. So how do you go about arranging
3:19
Speaker 2: a debt agreement?
3:20
Speaker 3: B So, the first place I would go is our
3:23
Speaker 3: friends at the National Debt Helpline. Again not sponsored, just
3:27
Speaker 3: good Eggs doing epic work. So head on over there.
3:30
Speaker 3: If you don't want to go there and you want
3:32
Speaker 3: to do it yourself, you can go and have a
3:34
Speaker 3: chat with a registered debt agreement administrator. I guarantee our
3:37
Speaker 3: friends at the National Debt Helpline have a good recommendation though,
3:41
Speaker 3: and then they will work with you to submit your
3:43
Speaker 3: debt agreement proposal to the AFSA or technically known as
3:48
Speaker 3: the Australian Financial Security Authority. You can find a debt
3:51
Speaker 3: agreement officer if you want, at the AFSA's website where
3:54
Speaker 3: they have a whole list of registered professionals in this space.
3:57
Speaker 3: So there's lots of resources flowed if you need help
4:01
Speaker 3: to arrange something like this.
4:03
Speaker 2: So it sounds like debt agreements are a really good
4:06
Speaker 2: option for people who are feeling snowed under by multiple
4:09
Speaker 2: debts that they just can't pay back. How do you
4:12
Speaker 2: know if it's the right option for you and if
4:14
Speaker 2: you have enough debt? Is it just a question or
4:17
Speaker 2: a matter of going to the National Debt Helpline and
4:20
Speaker 2: sorting it out or what would you recommend?
4:23
Speaker 3: Look, I would try to avoid these things. I won't
4:25
Speaker 3: say at all costs, But obviously we want to make
4:28
Speaker 3: sure that we understand our budget and our cash flow
4:30
Speaker 3: and what we're able to pay back. But I've actually
4:33
Speaker 3: sat down with people many many times and calculated that
4:36
Speaker 3: they can't afford the debt that they've got. And when
4:39
Speaker 3: I say it can't afford It's not because they're prioritizing
4:41
Speaker 3: luxuries or they are in a situation where they're like, oh,
4:44
Speaker 3: I just don't want to do that because I've got
4:46
Speaker 3: other priorities. Like, that's not the case. Sometimes I'll sit
4:49
Speaker 3: down with someone and I don't do this anymore. I
4:52
Speaker 3: do apologize because I just don't have the capacity, which
4:55
Speaker 3: is why I work now so closely with the National
4:57
Speaker 3: Debt Helpline to make sure that I can get people,
5:00
Speaker 3: well we're in these situations the help they need from
5:02
Speaker 3: a free financial counselor. But I'd sit down with people
5:05
Speaker 3: and be like, what's your cashally like? And they'd be like, okay,
5:07
Speaker 3: between us, we earn maybe seven grand. I'd be like, okay,
5:10
Speaker 3: what's your debt look like? And they'd be like, oh, well,
5:12
Speaker 3: at the moment, we're just putting debt repayments on other
5:15
Speaker 3: credit cards because we actually can't. Our debt repayments are
5:18
Speaker 3: about six grand a month, and they've got kids, and
5:21
Speaker 3: they might be literally unable to meet those requirements. I'm
5:25
Speaker 3: not saying that everybody's situation is as dramatic as that, Like,
5:29
Speaker 3: you could have a credit card that you genuinely don't
5:31
Speaker 3: feel like you can pay off. Entering a debt agreement
5:34
Speaker 3: is going to look different for everybody. It's not this
5:37
Speaker 3: one size fits all, like go and get this product.
5:40
Speaker 3: It's not a product. It is like a structure and
5:43
Speaker 3: a service that you would organize between you and the
5:46
Speaker 3: person you own money to so that you don't have
5:49
Speaker 3: to go bankrupt. But essentially, if you feel like you
5:53
Speaker 3: need one, that is the time that you want to
5:55
Speaker 3: have a chat with a financial counselor. Which is why
5:57
Speaker 3: I'm so pro chatting to the National Debt Helper. I
6:00
Speaker 3: promise they're delightful humans and they'll set you up with
6:03
Speaker 3: a financial counselor to have a chat with. But if
6:05
Speaker 3: you feel like you need one, I would be doing
6:07
Speaker 3: a whole heap of research around what that looks like.
6:10
Speaker 3: This isn't an option for you if you're like, oh, well,
6:13
Speaker 3: I think I might want to consolidate my debts, Oh
6:15
Speaker 3: it sounds good to negotiate it down, like, that's not
6:19
Speaker 3: the purpose, Like they will look into what you can
6:22
Speaker 3: afford and want a reasonable payout. They're not for people
6:25
Speaker 3: who just want to try and get out of paying
6:27
Speaker 3: debt off. If that makes sense, George, which I mean,
6:29
Speaker 3: we all would want to do if we were in it,
6:31
Speaker 3: Oh gotcha, But that's not what they exist for. Are
6:34
Speaker 3: there then limits on how much you can actually roll
6:37
Speaker 3: into these agreements? F look not from what I understand.
6:41
Speaker 3: I mean, I have had people who have been refused
6:45
Speaker 3: dead agreements in the past. I've had conversations with people
6:48
Speaker 3: on my own really sorry, they're just not willing to settle,
6:51
Speaker 3: or they just don't want to enter into that, or
6:53
Speaker 3: that won't work for your situation who have had to
6:55
Speaker 3: go down the route of bankruptcy. But if you can't
6:58
Speaker 3: get a dead agreement, I'm not saying that's okay, because
7:01
Speaker 3: I mean, it would be very stressful. But there are
7:04
Speaker 3: other options and that's why. And I mean, this just
7:06
Speaker 3: feels like an entire giant ad for our friends at
7:08
Speaker 3: the National Debt Help Line. You're welcome. I don't get
7:11
Speaker 3: paid by them, by the way, I never have been,
7:14
Speaker 3: But I would have a chat to a financial counselor
7:17
Speaker 3: if that's the situation you were in, because I guarantee
7:20
Speaker 3: you they will help and there's no shame in reaching
7:23
Speaker 3: out to them. It doesn't matter if money is dressing
7:25
Speaker 3: you and you just feel overwhelmed and you can't afford advice.
7:29
Speaker 3: I would be talking to them, like absolutely hands down.
7:32
Speaker 3: If I was in that situation, I would feel comfortable
7:34
Speaker 3: to call them. So, Gee, I don't think that there
7:36
Speaker 3: are limits on it, but people might not get one.
7:39
Speaker 3: So I've seen it before where it's just too much
7:41
Speaker 3: and it was just too complicated, or there were too
7:44
Speaker 3: many creditors involved, Like I worked with one person that
7:47
Speaker 3: had more than ten different credit cards that were all
7:50
Speaker 3: maxed oush and that's a really scary situation to be in.
7:54
Speaker 3: Like they were terrified, and I'm so grateful that I
7:57
Speaker 3: got to hold their hand and get them through that
7:59
Speaker 3: pro But yes, there is the risk that maybe someone
8:02
Speaker 3: doesn't want to go into an agreement because it is
8:04
Speaker 3: too high, But there's not an official limit per se.
8:07
Speaker 3: It very much comes down to the debt that you
8:09
Speaker 3: have and whether they are willing to enter into an
8:12
Speaker 3: agreement with you or not.
8:14
Speaker 2: And do they cover like all kinds of debts are
8:16
Speaker 2: only certain kinds?
8:18
Speaker 3: Oh good question. Gee, they actually only cover some types
8:23
Speaker 3: of debts. So you can't go get a debt agreement
8:26
Speaker 3: for your hex because that would not make sense. You
8:30
Speaker 3: also can't roll your court fines so if you're going
8:32
Speaker 3: to court for being a little bit naughty, they're not
8:35
Speaker 3: going to let you roll those. But you can get
8:37
Speaker 3: a debt agreement for most unsecured debts, so like credit
8:40
Speaker 3: cards or personal loans, or bills that you haven't been
8:43
Speaker 3: able to pay or rent that you haven't been able
8:45
Speaker 3: to meet, or an overdrawn bank account if that's the
8:47
Speaker 3: situation you've found yourself in. But yes, there are some
8:50
Speaker 3: things that aren't able to be covered. You know, I've
8:54
Speaker 3: never been in the situation, but they're probably not going
8:55
Speaker 3: to pay you drug dealer or off you know jay.
8:57
Speaker 2: Ah, fair call, fair call, And I guess like they
9:00
Speaker 2: wouldn't cover like your house, your home on your mortgage
9:04
Speaker 2: because they would just seize it, right like you just
9:07
Speaker 2: sell it. You wouldn't be able to keep that.
9:09
Speaker 3: Yeah, so with a secured asset. So a secured asset
9:13
Speaker 3: means there's something there and that's the risk that you carry.
9:16
Speaker 3: It's why a personal loan sits at an average of
9:19
Speaker 3: a fourteen percent interest rate and a home loan at
9:21
Speaker 3: the moment's like two percent. It's because of the difference
9:24
Speaker 3: in risk. So with a home loan, if you can't
9:27
Speaker 3: meet those repayments. It would be in your contract what happens,
9:31
Speaker 3: So they might go, okay, if you miss repayments for
9:33
Speaker 3: this period of time, will actually put your house on
9:36
Speaker 3: the market and recover our costs. There might be some
9:39
Speaker 3: outstanding amount, so say the property is valued it less
9:42
Speaker 3: or it is sold for less than what the mortgage
9:45
Speaker 3: you owe is, you might still end up in a
9:47
Speaker 3: situation where you're carrying a bit of debt that doesn't
9:50
Speaker 3: just disappear because they sell your house. So there might
9:54
Speaker 3: be some reasons why you would still carry debt. But yes,
9:57
Speaker 3: if it's secured, usually they'll get rid of that to
10:00
Speaker 3: recover as much of the cost as possible and go
10:02
Speaker 3: from there.
10:04
Speaker 2: And what are the consequences to this speed, because you've
10:08
Speaker 2: kind of said that it's not something you would just
10:10
Speaker 2: go into lightly to kind of not get rid of
10:12
Speaker 2: a few credit card debts, Like, what are the consequences
10:15
Speaker 2: we're looking at here?
10:16
Speaker 3: Yeah, so obviously the consequences are not nearly as significant
10:20
Speaker 3: as the consequences of going bankrupt, which we've discussed on
10:23
Speaker 3: another episode. But there are a few consequences that we
10:27
Speaker 3: absolutely should discuss. If you're in business, it is essential
10:31
Speaker 3: that you inform the people you do your business with
10:34
Speaker 3: that you're in a debt arrangement, Like legally you need
10:36
Speaker 3: to tell them, and you might go, Okay, I'm friends
10:38
Speaker 3: with all my clients, I don't care, but that could
10:41
Speaker 3: actually impact your reputation or whether they want to work
10:43
Speaker 3: with you. And like, hypothetically, what if I said that
10:46
Speaker 3: to my clients, George, Like, I'm a financial advisor. I'm
10:49
Speaker 3: not in debt, thankfully, but like what if I was?
10:53
Speaker 3: Would that make them see me as maybe not a
10:55
Speaker 3: good financial advisor? Cause I can't even manage that myself.
10:58
Speaker 3: I think that there's a lot to work through them.
11:00
Speaker 3: In addition to just having to tell people, like informing
11:03
Speaker 3: people of your situation, you might not even be comfortable
11:06
Speaker 3: with that. There's also the possibility that you might not
11:08
Speaker 3: be able to work. So there are certain professions like
11:11
Speaker 3: financial advice, that you're not allowed to work as that
11:15
Speaker 3: profession if you're in that situation. And as mentioned before,
11:20
Speaker 3: not all debts are covered in debt arrangements, but if
11:23
Speaker 3: you fall behind on the payment plan stipulate it in
11:26
Speaker 3: your agreement, then creditors do have the ability to repossess
11:29
Speaker 3: any assets you have if you've offered them a security
11:32
Speaker 3: for credit, so it could end up with you losing stuff,
11:36
Speaker 3: even though the reason you've probably entered a debt agreement
11:39
Speaker 3: is so that you don't lose your stuff anyway, really
11:43
Speaker 3: important to be on top of that, it also means
11:46
Speaker 3: that you're probably not going to be able to easily
11:48
Speaker 3: access credit in the future, and your details might appear
11:52
Speaker 3: and I say might because this sometimes happens and sometimes
11:55
Speaker 3: doesn't on a credit reporting agencies records for five or
11:59
Speaker 3: more years, and your name will also appear on the
12:02
Speaker 3: National Personal Insolvency Index, and how long exactly really depends
12:07
Speaker 3: on your situation. So it's one of those things where
12:09
Speaker 3: you're like, m is this worth it? What does this
12:12
Speaker 3: mean for me? But a lot of people will be
12:15
Speaker 3: in a situation where it's like, I just need to
12:17
Speaker 3: get out of debt. This is good regardless of what's
12:20
Speaker 3: going on. And to be honest, one of the things
12:22
Speaker 3: that people who you know, I've held their hand through
12:25
Speaker 3: getting debt agreements or like worked with or met, they're like,
12:28
Speaker 3: oh my gosh, Victoria, instead of having turned credit cards
12:31
Speaker 3: or instead of you know, maybe having a debt I
12:33
Speaker 3: can't pay back, you don't have to be that person
12:35
Speaker 3: who stereotypically has ten credit cards to actually get a
12:39
Speaker 3: debt agreement, they go, await, it has been lifted off
12:42
Speaker 3: my shoulders. Instead of having, you know, a couple of
12:44
Speaker 3: things to pay off and I've just never been able
12:46
Speaker 3: to keep track of it. I've just got one and
12:48
Speaker 3: it makes sense, and I've got somebody I can talk
12:50
Speaker 3: to when it really helps. Like, this can be a
12:53
Speaker 3: really empowering thing. Yeah, but it's also not something that
12:56
Speaker 3: you'd agree to if you can actually just pay it
12:59
Speaker 3: off and you're trying to get out of it early.
13:00
Speaker 3: If that makes sense to.
13:01
Speaker 2: You, Yeah, exactly, So it completely depends on your situation.
13:05
Speaker 3: Yeah.
13:05
Speaker 2: We will be back on the other side of this
13:07
Speaker 2: break to discuss the differences between bankruptcy, debt consolidation, and
13:11
Speaker 2: debt agreements. Guys, so please don't go anywhere, okay, vickid
13:15
Speaker 2: What happens if we've set up our plan with our
13:18
Speaker 2: debt agreement administrator and like we've been doing it for
13:22
Speaker 2: six months or so, but then we get in there
13:25
Speaker 2: and we just can't keep up with the repayments. What
13:28
Speaker 2: happens then? Do we go bankrupt?
13:30
Speaker 3: No? Not necessarily, there are options there is always a
13:33
Speaker 3: light at the end of the tunnel, even if you
13:35
Speaker 3: can't see it right now, I promise, And it's really
13:37
Speaker 3: important that you remember that there's no such thing as
13:40
Speaker 3: completely lost, I promise. But there are a couple of
13:44
Speaker 3: options for you if you can't keep up with payments
13:46
Speaker 3: or if you no longer want to use the agreement,
13:49
Speaker 3: and that's varying or terminating your agreement. Of course, you
13:53
Speaker 3: are going to need to talk to your debt Agreement
13:54
Speaker 3: administrator and they're going to lash the creditors to sort
13:57
Speaker 3: everything out and have a chat about where you're at
13:59
Speaker 3: and what going on. The most important thing in this
14:02
Speaker 3: situation is communication, And I mean every relationship is based
14:07
Speaker 3: on communication. But hot tip hot relationship advice from GMP.
14:12
Speaker 3: But if you do choose g to terminate the agreement,
14:15
Speaker 3: then it's really important to think about the consequences, like
14:19
Speaker 3: that credit can apply to make you bankrupt and creditors
14:22
Speaker 3: can commence recovery for the payment of debts that you owe.
14:26
Speaker 3: So sometimes g bankruptcy is not a choice. Some other
14:31
Speaker 3: people might decide, you know what, No, I'm going to
14:33
Speaker 3: take her for ulsh'sworth, and we actually need to send
14:36
Speaker 3: her a bankrupt to get back what we need. Your
14:40
Speaker 3: contract will also automatically be terminated if you fail to
14:43
Speaker 3: make payments for six months after its due, or if
14:47
Speaker 3: you don't finish your payments within six months of the
14:50
Speaker 3: end of the agreement. So there are a couple of
14:53
Speaker 3: things to take into consideration there. Again, as we said before,
14:56
Speaker 3: communication is the key here and a lot of people
15:00
Speaker 3: during COVID. We really need to stop talking about COVID
15:03
Speaker 3: on this podcast because it really triggers me. And I'm
15:05
Speaker 3: sure I'm not the only one, but during COVID who
15:09
Speaker 3: kind of buried their heads in the sand and found
15:11
Speaker 3: themselves in a more sticky situation because they didn't talk
15:14
Speaker 3: to their dead agreement administrator when in reality, if you had,
15:18
Speaker 3: they would have said, look, this situation is absolutely cooked.
15:20
Speaker 3: She can't pay them, or we're going to stretch them out,
15:22
Speaker 3: or we're going to put them on hold for a bit.
15:24
Speaker 3: Like there is always a way to work through this,
15:27
Speaker 3: and it can be really hard and it can feel
15:29
Speaker 3: really overwhelming. But I promise, I promise, they promise communicate
15:33
Speaker 3: and everything will be okay.
15:35
Speaker 2: Yeah, definitely, Sophy, I want to talk to you about
15:38
Speaker 2: debt agreement versus bankruptcy versus debt consolidation. So my understanding
15:44
Speaker 2: is that probably the first step would be debt consolidation,
15:50
Speaker 2: and then if things were a little more serious, you'd
15:52
Speaker 2: move into looking at a debt agreement, and then perhaps
15:56
Speaker 2: worst case scenario, you'd look at bankruptcy.
16:00
Speaker 3: Does that you have a money podcast, Well, you on
16:04
Speaker 3: the money?
16:04
Speaker 2: Maybe I am on the money you are, But does
16:06
Speaker 2: that sound right like? Is that how we stagger our steps?
16:09
Speaker 3: Yes, it would be. So first things first, a debt
16:13
Speaker 3: consolidation doesn't mean you're in a sticky situation. It just
16:16
Speaker 3: means that you're going to consolidate a number of debts together.
16:20
Speaker 3: So it might actually be something as simple as, hey,
16:23
Speaker 3: I have this car loan it's at fifteen percent, and
16:26
Speaker 3: I have a mortgage and that's at two and a
16:28
Speaker 3: half percent. I'm going to talk to my home lender
16:31
Speaker 3: and you know, consolidate those things together and put my
16:34
Speaker 3: car loan into my mortgage. Sometimes that's possible, sometimes it's not,
16:38
Speaker 3: but that could be a good financial decision. Maybe you
16:41
Speaker 3: made that decision not because you're actually struggling to meet payments,
16:46
Speaker 3: but you're actually in a situation where you just wanted
16:48
Speaker 3: to save some money, which is a smart thing to do,
16:50
Speaker 3: and if you talk to a broker I'm sure that
16:52
Speaker 3: they would take you through those steps and go this
16:54
Speaker 3: is possible, this isn't possible, but it would put you
16:57
Speaker 3: in a better financial situation. The second thing is consolidating
17:02
Speaker 3: debt because it is a little bit overwhelming and you've
17:04
Speaker 3: got a fair few debts here, there and everywhere, and
17:07
Speaker 3: you just want one easy payment. In saying that, not
17:10
Speaker 3: every single debt consolidation will be accepted. It's obviously based
17:14
Speaker 3: on the risk and what credit you have access to
17:16
Speaker 3: and what you actually owe as to whether a bank
17:19
Speaker 3: is going to want to take that on or not.
17:21
Speaker 3: But again, you could consolidate it, meaning lower repayments potentially
17:26
Speaker 3: over a longer period of time, but one payment instead
17:29
Speaker 3: of multiple. But you also might do a debt consolidation
17:33
Speaker 3: if you really are in a pickle and can't afford it,
17:36
Speaker 3: and there are a number of different lenders that actually
17:38
Speaker 3: help you through that. So Good Shepherd actually is a
17:42
Speaker 3: really good example of a loan that is a debt consolidation,
17:47
Speaker 3: but it's actually for people who have found themselves in
17:49
Speaker 3: a bit of a pickle, so they have an offering
17:51
Speaker 3: called the NILS loan, which is a no interest loan
17:55
Speaker 3: and essentially you can borrow money so that you can
17:58
Speaker 3: pay it back without the interest, and they'll have a
18:00
Speaker 3: chat with you about what that actually means for you.
18:03
Speaker 3: So they have a whole heap of different things. They
18:05
Speaker 3: have loans for people experiencing family and domestic violence. They
18:09
Speaker 3: have loans for people who need financial assistance, loans for
18:13
Speaker 3: people who have recently found themselves single, loans for people
18:16
Speaker 3: who need a car and can't access one. Like they
18:19
Speaker 3: are just obviously Good Shepherd makes them sound like good people,
18:22
Speaker 3: because they are, but there are lots of different companies
18:25
Speaker 3: who do this. Obviously Good Shepherd has never sponsored us,
18:28
Speaker 3: but they are just again good Eggs doing good things.
18:31
Speaker 3: Someone who has sponsored us and partnered with the show though,
18:34
Speaker 3: is Wiser WISR and they do debt consolidation loans and
18:40
Speaker 3: they're They're not like a no interest loans scheme. They
18:43
Speaker 3: are just a good business doing good things. But the
18:47
Speaker 3: thing that I really like about them and learned about
18:50
Speaker 3: them in the process of working with them, that has
18:52
Speaker 3: given me essentially mad respect for what they do is
18:55
Speaker 3: they really try to understand your personal situation and really
18:59
Speaker 3: try to go above them beyond work out what that
19:01
Speaker 3: might look like for you and how that could work,
19:04
Speaker 3: because they actually want to help and they actually want
19:07
Speaker 3: to do good things, so they would be someone that
19:09
Speaker 3: I'm contacting as well. And then obviously the National Debt Helpline,
19:13
Speaker 3: which we've spoken.
19:14
Speaker 2: About before of course, of course, so that's debt consolidation
19:18
Speaker 2: v M. We've then got your debt agreement. So when
19:22
Speaker 2: things are getting a little more dicey, if.
19:24
Speaker 3: You don't know what a debt agreement yet is, just
19:27
Speaker 3: like go back to the start of the podcast. I
19:29
Speaker 3: did explain it, but sometimes it does take a few goes.
19:33
Speaker 3: Let's be honest. Sometimes I listen to things. G Yeah,
19:35
Speaker 3: Like I listened to a lot of audio books, honestly,
19:38
Speaker 3: not what I've said, Like I never remember what I said.
19:41
Speaker 3: But sometimes I listen to audio books and I get
19:44
Speaker 3: like three chapters in and then they're like, oh, Georgia
19:46
Speaker 3: did X y Z. I'm like, who's Georgia, Like I've
19:49
Speaker 3: missed entire pieces of audio, and I'm like, okay, I'm
19:53
Speaker 3: going to have to go back and start again. So
19:55
Speaker 3: I literally get it. But essentially, a debt agreement is
19:58
Speaker 3: that next step. If you're not able to con solid
20:00
Speaker 3: you'll loan for any reason, then that would be what
20:03
Speaker 3: you're considering. Again, talk to our friends at the National
20:06
Speaker 3: Debt Helpline. They will help you. And then when it
20:09
Speaker 3: comes to bankruptcy, that's obviously the more significant version of
20:13
Speaker 3: a debt agreement, which has a number of different consequences.
20:17
Speaker 3: Comparing the two, a debt agreement might actually be for
20:21
Speaker 3: you a more suitable alternative because it can benefit the
20:24
Speaker 3: creditors that you owe money to as they might actually
20:27
Speaker 3: end up receiving more money than if you were to
20:30
Speaker 3: go bankrupt. They like a plan, I promise you that's
20:33
Speaker 3: not a bad thing. You don't instantly have to jump
20:36
Speaker 3: to bankruptcy, and it can provide a level of relief
20:40
Speaker 3: to you if you're not actually able to manage your debts.
20:42
Speaker 3: But there are some consequences which can affect you, which
20:45
Speaker 3: we've obviously already gone over to. But again you'll have
20:48
Speaker 3: to work out if you're eligible for this, because there
20:51
Speaker 3: are obviously going to be limits and the amount of
20:53
Speaker 3: debt and income you have to have to actually be
20:56
Speaker 3: eligible for this.
20:57
Speaker 2: Yeah, right, the last question for you today, So on
21:02
Speaker 2: the whole. Would you say that you would recommend someone
21:05
Speaker 2: who is struggling with multiple debts to consider taking part
21:08
Speaker 2: in a debt agreement if they've already considered the other
21:11
Speaker 2: options and you know, maybe they've looked at debt consolidation
21:14
Speaker 2: and it's not going to do the job for them.
21:16
Speaker 3: Look, I would, but again I would be really wary
21:19
Speaker 3: because these are significant outcomes. It's not like, gee, go
21:24
Speaker 3: and get this loan. It's going to solve all your problems, Like,
21:26
Speaker 3: that's not what a debt agreement is. Like, this is
21:29
Speaker 3: a very serious thing to be taken very seriously, Like
21:32
Speaker 3: you're going to be on national registers. It's going to
21:35
Speaker 3: impact your credit score significantly. In saying that if you
21:39
Speaker 3: are considering a debt agreement, I would, you know, take
21:43
Speaker 3: a stab in the dark and say that you probably
21:45
Speaker 3: don't have a good credit score to begin with, but
21:48
Speaker 3: long term, that will become something that is applicable. Like
21:52
Speaker 3: if you're in a situation where you're like, oh my gosh,
21:53
Speaker 3: I could just buckle down and pay this debt off
21:56
Speaker 3: really aggressively over the next couple of years and then
22:00
Speaker 3: there are no ramifications.
22:01
Speaker 2: Great, but once.
22:03
Speaker 3: You've paid off that debt and you've done a debt agreement,
22:06
Speaker 3: it's actually going to be on your quote like file
22:09
Speaker 3: for a fair few years after that, which is going
22:12
Speaker 3: to stop you from being able to buy a property
22:14
Speaker 3: or being able to do, you know, the things you
22:16
Speaker 3: want to do in life. And I'm not saying that
22:18
Speaker 3: that's the worst thing ever, because for some people this
22:21
Speaker 3: is incredibly freeing, like it puts them in a situation
22:24
Speaker 3: where they're back in control, and there's nothing better than
22:28
Speaker 3: being in control of your finances. So if that was
22:31
Speaker 3: the case, absolutely, but a lot of people might just
22:34
Speaker 3: really have tunnel vision. They'll go, Gee, I'm never going
22:37
Speaker 3: to be able to afford property, I'm never going to
22:38
Speaker 3: be able to do this or that, and I don't
22:40
Speaker 3: need credit, and then they enter into a debt agreement
22:43
Speaker 3: for the next five years, and once your dead agreement finishes,
22:46
Speaker 3: you're going to be on the register for at least
22:48
Speaker 3: another five years. You're going to meet a partner, maybe
22:51
Speaker 3: they have significant savings, and then you're not able to
22:54
Speaker 3: get a home loan because of that. So I think
22:57
Speaker 3: that you need to remember, like things can change significantly,
23:00
Speaker 3: And I'm not saying we need to be reliant on
23:02
Speaker 3: a partner to buy property or do something in any way,
23:05
Speaker 3: shape or form. But a debt agreement is serious. I
23:08
Speaker 3: hopefully getting those vibes out there, but it is something
23:11
Speaker 3: I would want you to consider before considering bankruptcy. Like
23:15
Speaker 3: that is absolutely something. Is it going to work for you? No? Okay,
23:19
Speaker 3: now let's consider bankruptcy because these things, as much as
23:23
Speaker 3: they are dramatic, can be incredibly freeing. Like I can't
23:27
Speaker 3: tell you the amount of people who have been in
23:30
Speaker 3: so much debt. Like you know, I'm not going to
23:33
Speaker 3: share too much about my clients obviously, because the things
23:36
Speaker 3: I have told you guys thus far are really non identifiable.
23:39
Speaker 3: But I remember talking to one person. This was years ago,
23:44
Speaker 3: and they were in more than two hundred and fifty
23:48
Speaker 3: thousand dollars worth of credit card debt. And this was,
23:51
Speaker 3: you know, pre real commission, so there was obviously a
23:54
Speaker 3: lot more leniency on lending and being able to access credit.
23:57
Speaker 3: And they had bounced from one credit card to another
24:00
Speaker 3: credit card to another credit card. And when I was like,
24:03
Speaker 3: how did this even happen? Like you shouldn't have got
24:06
Speaker 3: this because of your credit report, They're like, oh, you
24:08
Speaker 3: just don't tell them about the other credit cards, and
24:10
Speaker 3: I was like, what, Like, my mind was blown. But
24:14
Speaker 3: when you calculated that debt, because obviously it had such
24:17
Speaker 3: a high interest rate, we worked out it was going
24:20
Speaker 3: to take her one hundred and eight years paying the
24:23
Speaker 3: minimum repayments to get out of debt, and she couldn't
24:26
Speaker 3: even afford the minimum repayments. So we were definitely considering
24:30
Speaker 3: a debt agreement. But then when we worked out what
24:32
Speaker 3: that actually looked like, it wasn't going to work, so
24:34
Speaker 3: we went down the bankruptcy route. In saying that that's
24:37
Speaker 3: a very dramatic example. It is not the norm. It
24:40
Speaker 3: is not what the normal people getting a debt agreement
24:43
Speaker 3: looks like. Often it can look like a mum and
24:46
Speaker 3: dad who have been trying to get their kids through school,
24:48
Speaker 3: have gone through a lot of stuff through COVID, have
24:50
Speaker 3: you know, got a mortgage, got a couple of personal loans,
24:54
Speaker 3: and maybe not stayed on top of their budget and
24:56
Speaker 3: cash flow. Who are considering this So it's not, you know,
24:59
Speaker 3: always the most rheumatic stories. It could actually just be
25:02
Speaker 3: a mum and dad trying to do their best and
25:05
Speaker 3: this is a really great outcome for them because it
25:07
Speaker 3: stops them from losing their home. So I just want
25:10
Speaker 3: to make sure that you guys know, there's lots of
25:12
Speaker 3: different situations that are applicable to this. But if you
25:15
Speaker 3: are feeling overwhelmed with debt in any way, shape or form,
25:19
Speaker 3: I would be sitting down going, Okay, what does my
25:22
Speaker 3: budget look like? Doing a little bit of homework so
25:24
Speaker 3: you know what's coming into your bank account, know what's
25:27
Speaker 3: going out of your bank account. And then if you're
25:30
Speaker 3: still like, look, I can't do this National Debt Helpline
25:34
Speaker 3: Free financial Counselors, I promise you they've never paid me
25:38
Speaker 3: a dollar, but like it sounds like they pay me
25:40
Speaker 3: a lot.
25:40
Speaker 2: Hey, they do get many a shout out. Okay, V
25:44
Speaker 2: I do think that is all we have time for.
25:46
Speaker 3: I think it is. This has become a Ted talk again.
25:49
Speaker 2: I loved it. I loved it as per.
25:51
Speaker 3: Look, I'm just really passionate about it, and debt is
25:53
Speaker 3: something that I think is so stigmatized and often if
25:57
Speaker 3: you're you know, considering this or it's been suggested a
26:00
Speaker 3: financial counselor, it can send you into a little bit
26:02
Speaker 3: of a spin because you'll feel, oh my gosh, I've
26:05
Speaker 3: failed or I'm not good enough, or I've done the
26:07
Speaker 3: wrong thing, or if really messed up, like you haven't,
26:10
Speaker 3: I promise you. Debt is really hard and it's so
26:13
Speaker 3: easy to get into, and it is not a reflection
26:16
Speaker 3: of who you are personally at all. Like anybody's money
26:20
Speaker 3: situation is not a reflection of who they are as
26:23
Speaker 3: a person. Like as long as you are kind and
26:24
Speaker 3: as long as you are nice to everybody that crosses
26:26
Speaker 3: your path, Like I think that that's all we ever
26:29
Speaker 3: care about, or all I ever care about. But I
26:32
Speaker 3: think it's really important to remember that if you're going
26:34
Speaker 3: into a situation where you're considering bankruptcy or a debt agreement,
26:39
Speaker 3: that doesn't reflect on you badly. In fact, it takes
26:41
Speaker 3: a really strong person to realize the situation they're in
26:44
Speaker 3: and create a solution to get out of it.
26:46
Speaker 2: I'm going to sneak one last question in just to
26:49
Speaker 2: end on a positive note.
26:51
Speaker 3: Yeah, go for it.
26:51
Speaker 2: What ended up happening with your client who did file
26:54
Speaker 2: for bankruptcy? Did it all work out? Okay? Oh?
26:56
Speaker 3: Absolutely. I'm not their advisor anymore. I don't have anything
27:01
Speaker 3: to do with them, which is a bit sad. But
27:04
Speaker 3: last time we left them, they were Okay, they had
27:07
Speaker 3: filed for bankruptcy and they were going through the process.
27:10
Speaker 3: The thing that was most empowering about that was they
27:13
Speaker 3: filed for bankruptcy. They didn't wait until a bank sent
27:17
Speaker 3: them into bankruptcy. And that meant a few things. It
27:20
Speaker 3: meant that they were in control of the process and
27:23
Speaker 3: how it worked. They weren't forced out of their home
27:26
Speaker 3: at the last minute. They weren't you know, having their
27:28
Speaker 3: door knocked down by creditors. It was a situation where
27:32
Speaker 3: they could be more in control of a situation that
27:34
Speaker 3: was already out of control. So I think it's really
27:37
Speaker 3: important to realize, like, don't stick your head in the sand.
27:40
Speaker 3: You can save you know, a portion of it, or like,
27:44
Speaker 3: you know, we found a way. They did have to
27:46
Speaker 3: sell their home, but that was on their terms, like
27:49
Speaker 3: they got to list it up for sale and pay
27:51
Speaker 3: back their debt instead of having it go through a
27:53
Speaker 3: bank and have the bank sell it, which more often
27:56
Speaker 3: than not will mean that you get a lower return
27:58
Speaker 3: for it because they just want to flog it off
28:00
Speaker 3: really quickly.
28:00
Speaker 2: Yeah right, Okay, hopefully that helps. No, that's great, that's
28:04
Speaker 2: that's good to hear. Alrighty V I think now it's
28:07
Speaker 2: actually like, that's actually all we have time for now.
28:09
Speaker 3: Actually really we questions done, normal questions from Georgia. But
28:14
Speaker 3: as always, just before we head off, we'd like to
28:16
Speaker 3: acknowledge and pay respect to Australia's Aboriginal and Torrest Straight
28:20
Speaker 3: Island to peoples, they're the traditional custodians of the lands,
28:23
Speaker 3: the waterways and the skies all across Australia. We thank
28:27
Speaker 3: you for sharing and the caring for the land on
28:29
Speaker 3: which we are able to learn. We pay respects to
28:31
Speaker 3: elders past and present, and we share our friendship and
28:34
Speaker 3: our kindness.
28:35
Speaker 2: And remember, guys, that the advice shared on She's on
28:38
Speaker 2: the Money is general in nature and does not consider
28:41
Speaker 2: your individual circumstances. She's on the Money exists purely for
28:45
Speaker 2: educational purposes and should not be relied upon to make
28:48
Speaker 2: an investment or a financial decision. And we promise Victoria
28:52
Speaker 2: Divine is an authorized representative of Australia Pacific Funds Management
28:56
Speaker 2: Proprietary Limited ABN three four one three two four six.
29:01
Speaker 3: Now I'm keeping it two five seven AFSEL three three
29:04
Speaker 3: nine one five one. But as I mentioned, g as
29:08
Speaker 3: of twenty twenty two, we'll have some sexy new numbers
29:11
Speaker 3: to throw your way, and hopefully you can remember them
29:13
Speaker 3: a little bit better.
29:14
Speaker 2: Does that mean I don't have to say proprietary limited anymore?
29:17
Speaker 3: Oh no, you'll still have to say proprietary limited.
29:20
Speaker 2: See lady, guys.
29:21
Speaker 1: Whye bye guys,