Debt Consolidation

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Networkn
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#1939696 16-Jan-2018 13:09

MikeAqua:

networkn:

Apparently, it's 80. Not sure what the scale is.

So conversations in the last few days have been exercises in frustration. I had hoped that what he had started the conversation with, was the start of him maturing and looking to solve his problems long term, but sadly, it appears he wants an easy solution only. Doesn't want to do a money management course, says he just needs a consolidation loan. He hasn't hit rock bottom yet, and so I have told him, CAP or similar or no more help from me. I am not wasting my time being more invested in his solution than him.

I don't have a response from that yet, but I am not holding my breath.

Some kids (we have 4) only learn stuff the hard way unfortunately.

Seems like all the boys in this family have the same tendency. I've done my part, so now the call is his. He is an "almost" adult now. Freedom to make choices and consequences.

ANglEAUT

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#1939701 16-Jan-2018 13:13

MurrayM: So would someone like me, who has never applied for credit anywhere, and never been in debt or made late payments, have a "perfect" credit rating?

Unfortunately, No. These credit rating companies collect data from many sources. Because you've never applied anywhere, you could be in the same boat as many youngsters, have a low credit rating because there is no history. "You are a risk because we don't have enough info about your past behaviour".

MurrayM: ... Do companies (such as power companies) feed back positive information to your credit history, eg never been late paying?

Yes, they do. Back in the day, only negative comments were collected. AFAIK, now it's the law that also positive comments are collected.

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Paul1977

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#1939733 16-Jan-2018 14:18

Sam91:

Credit Simple:

Wohoo! More than 700
You’re basically magical, and if you’re over 800, you’re a credit unicorn. Scoring above 700 puts you into the high end of the score ranges. Scoring in this range will often be associated with being in the older age groups, having been fairly disciplined with your applications for credit and not making too many applications, having a mortgage and/or an investment property. And constantly paying your accounts on time.

I don't know that it's really THAT "magical".

Credit Simple has me in their 'Unicorn' range, but also ranks me at 71st on my street of 120 houses.

Detruire

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#1940088 16-Jan-2018 19:19

My rating on Credit Simple dropped by about 80 points when I switched to different gas and power companies.

It only increased by around 50 when Slingshot updated their records to show that I hadn't missed payments.

rm *

tdgeek

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#1940091 16-Jan-2018 19:23

Detruire:

My rating on Credit Simple dropped by about 80 points when I switched to different gas and power companies.

It only increased by around 50 when Slingshot updated their records to show that I hadn't missed payments.

My Credit Simple was HIGH. 930 odd. I wasnt sure if it was a scam high or what, but I unsubscribed but still get emails. And I miss the odd payment as I do some manually. So while I am 100% sorted and reliable, there are some accidental glitches there.

dejadeadnz

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#1940123 16-Jan-2018 19:54

networkn:

But making an enquiry shouldn't nesacarrily mean you are the higher risk...

Of course. It's not inquiries per se that's the problem -- it's the frequency, types, and with whom one has made inquiries that's the problem for the likes of your nephew and other marginal borrowers.

Edit: I just saw your mention of his credit score. No mainstream lender will touch a person with that score. He's only making his own life worse by wasting time trying to get debt consolidation loans. Unless he works with a budget advisor, the chances of him getting any loan from any reputable financial institution within the next 2 years is close to zero.

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blakamin

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#1940128 16-Jan-2018 20:04

networkn:

but sadly, it appears he wants an easy solution only. Doesn't want to do a money management course, says he just needs a consolidation loan.

That's the bit I was talking about (but understandably, most ignore me).

Unfortunately, sometimes you have to let people learn the hard way.

Without him doing it the hard way, it'll happen again.

jnimmo

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#1940210 16-Jan-2018 21:32

Not sure if anyone has mentioned but interestingly just noticed Credit Simple have launched a new service https://www.clearname.co.nz/ may or may not be helpful

SheriffNZ

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#1942207 18-Jan-2018 22:15

Someone mentioned the no asset procedure. I think that's one option and a valid one. Another one is making a proposal to each of his creditors (the same proposal to all of them) explaining his issue and requesting that they each reduce their interest rates down by an equal % each in order to all him to pay everyone. the creditors would probably look favourably on this as it reduces the admin cost of chasing him all the time. It also limits the possibility of him doing something like the No Asset Procedure where they wouldn't get anything (I haven't looked into how a secured car fits in that system).

The proposal could be made on behalf of your nephew and you can say you'll help administer it but take on no liability. Alternatively he could do it himself but he's likely to need help drafting professional letters and communicating with his creditors.

Any creditor who doesn't at least consider something like this is probably someone he shouldn't have borrowed from in the first place.

Batman

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#1942212 18-Jan-2018 22:34

if the nephew isn't taking responsibility the last thing I want to do is to do all the work

tdgeek

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#1943232 19-Jan-2018 07:17

SheriffNZ: Someone mentioned the no asset procedure. I think that's one option and a valid one. Another one is making a proposal to each of his creditors (the same proposal to all of them) explaining his issue and requesting that they each reduce their interest rates down by an equal % each in order to all him to pay everyone. the creditors would probably look favourably on this as it reduces the admin cost of chasing him all the time. It also limits the possibility of him doing something like the No Asset Procedure where they wouldn't get anything (I haven't looked into how a secured car fits in that system).

The proposal could be made on behalf of your nephew and you can say you'll help administer it but take on no liability. Alternatively he could do it himself but he's likely to need help drafting professional letters and communicating with his creditors.

Any creditor who doesn't at least consider something like this is probably someone he shouldn't have borrowed from in the first place.

Reducing interest will not help much at all. And, it becomes a no brainer for anyone and everyone to say they are struggling so please reduce interest like you always do. Better to ask for a holiday, and any that allow this, allows him to focus on the smaller debts to clear them, which will generate more cashflow for the next low debt. When the holiday is up, he is in a better position

The $10k car wont apply for NAP, the limit is 5k, and he wont get rid of the car

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michaelmurfy

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#1943238 19-Jan-2018 07:51

While I work for a bank I will not provide personalised financial advice here (as I am not fully qualified to) however please consider that a NAP whilst it gives you a fresh start it is going to make banking hell for the next year as most banks (except Kiwibank or Westpac IIRC) won't accept you as a customer while you're on the insolvency list.

The best thing he can do, no matter what people say is to communicate with the companies he has got debt with in order to try and reduce his payments and make it more affordable. As others have rightfully pointed out get rid of the high interest debt first, and keep in touch with the companies regarding his position. It is in their best interest to help out as going to a debt collection company normally incurs a loss for them and is a last resort.

Also guys - please stay on topic here. We don't need to know your credit scores. The focus of this topic is to help out the OP.

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tdgeek

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#1943242 19-Jan-2018 08:11

Michael, do you not feel that the interest is a bit of a red herring?

Say one loan had $800 to pay, low interest, $50 per week. Another loan had $2500 to pay, high interest, $80 per week. Paying down the lower loan first, frees up $50 per week cashflow which can then be applied for the next attack on the loans. All of which would off course need a helping hand from the creditors by way of a small holiday

mudguard

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#1943247 19-Jan-2018 08:34

I'm the one who mentioned NAP, but it is bad as bankruptcy, it stays on the credit check for up to seven years. And it should only be the absolute last resort.

Paul1977

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#1943257 19-Jan-2018 09:18

I haven't seen it mentioned anywhere (unless I missed it), what sort of interest rates he is currently paying.

The OP said that they were looking to leave the car loan as is, as they felt it was manageable; so that only leaves 10K needing the consolidation loan. What sort of rates are currently making the payments crippling while the (relatively) high interest rates of a debt consolidation loan would be 'easily serviceable' (paraphrasing OP)?

E.g. 10K over 2 years the weekly repaying at 15% is only $11 a week less than the same loan at 25%.

EDIT: Changed percentage in example to better reflect best case consolidation load interest rate given his low credit score.

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