Arrears and Debt Consolidation: Case Study

Life can throw curveballs at anyone at any moment. One day everything is ticking along perfectly and then unexpectedly life happens. Illness, job loss, business slumps or you just get in over your head with multiple credit cards and loans. All the little debts such as credit cards and personal loans can be hard to pay as they attract high interest and multiple repayments add up. There are ways to consolidate everything even when you're behind on repayments or even have defaults registered against you.

Case Study

Assets

House: $800,000

Cars: $60,000

Liabilities

Credit Card: $20,000 - Repayments $400 a month, 20% p.a

Credit Card: $10,000 - Repayments $200 a month, 20% p.a

Credit Card: $10,000 - Repayments $200 a month, 20% p.a

Personal Loan: $25,000 - Repayments $800 a month, 12% p.a

Car Loan: $40,000 - Repayments $600 a month, 8% p.a

Current Mortgage: $450,000 - Repayments $2,280 a month, 4.5% p.a

Total Repayments: $4,480 a month

Credit History

Personal loan arrears: Late payments for the last 4 weeks

Unpaid Default: $500 Phone Bill

Solution

Combine all outstanding debts in to your mortgage. 

Loan Amount: $555,000

Monthly Repayment: $3,431

By using a non-conforming lender you can combine all of your existing debts in to one mortgage which is over a longer term which makes repayments lower from week to week. The saving in this scenario is over $250 a week. 

The reason you would need to approach a non conforming lender is this sort of scenario won't fit the mainstream lenders policy. Non conforming lenders specialise in this space. They are able to lend to clients with credit impairments, business lending, ATO debts, non standard income and discharged bankrupts. It is important to keep in mind that while repayments are lower you may be paying more interest in the long term but this is a solution to get back on top of your finances and save you from further credit impairment.