Living your best life and now in credit card debt?

Castle Debt
Castle Debt

What does one do when you are living your best life and somehow accumulates a massive credit card debt? With one in six Aussies in credit card debt, it’s no secret that we run up a fair bit of cash on the credit card trying to live our best lives. Be it the daily avocado on toast that we can’t live without for breakie, eating out at the hottest new restaurants, or booking that last minute trip to Bali, because you only live once right?

Research shows that over 53% of those travelling over the next year will borrow money to do so, be it using a credit card or via a personal loan. Aussie travellers are the third biggest spenders when on holiday, according to this year’s Visa Global Travel Intentions Study and on average we’re taking 2.5 holidays per year. So for those, like many of us who have maxed out 3 credit cards, thanks to our ‘ YOLO’ attitude when booking holidays and spending whilst overseas, because you don’t go all the way to Europe and not stay in that InstaFabulous hotel! What are you supposed to do now that those minimum weekly/monthly repayments aren’t being made and the bank keeps putting interest on top of what you already owe?

One solution is a debt agreement, which is a legally binding agreement between you and your creditors (i.e. the people/companies you owe money to, which could be banks, phone companies – yes your iPhone X contract that you had to upgrade to and are stuck with for 24 months!). Through these agreement companies like Castle Debt Solutions work with you to decide how much of your debt you can actually afford to pay back within a 5 year period – that’s right, you only pay back a percentage. Then your credit cards are frozen, no interest, no more fees, just a monthly payment that you can actually afford based on your income and expenses.

Sounds like a miracle? We thought so too! However, when entering into a debt agreement you must consider:
* Entering a debt agreement may affect your ability to get credit
* It will appear on a public register for the life of the Debt Agreement
* However, all traces of being in a Debt Agreement will clear when the life of the Debt Agreement has been completed. This is different than a Bankruptcy where you name stays on the Public Register forever.

Another solution to your travel debt woes is bankruptcy. Bankruptcy is a good solution for people who have high debt and no income. Bankruptcy can release you from most of your debt but not all of it. When you declare bankruptcy, a trustee is appointed for you by AFSA who manages your bankruptcy on your behalf. If you have any assets (car or home) the trustee takes control of these if they are over a certain value and will sell them to pay off your debts. If the money made is higher than the debts, you may get some money returned. However, this is not always guaranteed.

The final option is personal insolvency. If you have less income than you have bills and other outgoings on a weekly or a monthly basis then you are classed as ‘INSOLVENT’. If this is due to having to spend the money on repaying your debts, then contact Castle Debt Solutions immediately.

We spoke to Sarah regarding her experience with Castle Debt Solutions.

What got you in debt in the first place? What are your triggers to spending?
The first credit card I got was so I could purchase flights to Malaysia one Christmas. I spent a lot while I was there, just on dinners and drinks out as well as shopping because things are generally cheaper there. Online clothing sales are also something that I find hard to miss!

Prior to debt agreement – what steps did you try to maintain your repayment?
When I had only one credit card, I was pretty good at paying it off monthly. It wasn’t until I maxed this out (after a trip to Europe) that I started to struggle to make monthly payments and pay interest fees.

If you have more than 1 credit card in debt. Did you fall into the trap of lower interest by bringing over some of your precious cc debt and made it worse?
My second credit card was set up as a NAB balance transfer from my ANZ credit card. This was a balance transfer of $2500. Once again I started off paying this off well but then I would get to the end of the month and just put the odd thing on this card. What I didn’t know at the time was spending on this card had a huge interest rate. When this card was cancelled its total was at $3,500 in accumulated fees and interest! I then got a rewards card when I had to buy flights to a friend’s wedding in the UK. Whilst maxing this card out got some good air miles – it was so not worth the interest rates!

How did you hear about a debt agreement and what made you take that first step?
I heard about it through a friend of mine. Like most people when I heard the term debt agreement I assumed it was a scam. But in fact, it’s completely legitimate and such a great solution to your debt issues! Castle Debt Solution wiped off $3k of my $20k debt and now I simply make weekly repayments of $70 which covers all my credit card debt and what was left of my phone contract. Frankly, I wish I had found out about debt agreements sooner!

Being on the agreement – how has it helped you?
When I sat down with Castle Debt Solutions to run through my weekly expenses and work out my monthly payments, I was able to really understand just how much I was spending week to week on things that were, in fact, unnecessary like Uber Eats and Deliveroo instead of cooking or catching an Uber instead of walking or taking public transport. Those costs were some of the highest in my weekly budget which was alarming! I also switched from a $110 per month phone contract with Optus to a $40 per month prepaid service with Boost Mobile that gives me almost as much data! Little tips like this were provided by the team at Castle Debt Solution which was really helpful to reduce my spending moving forward.

Now that my agreement has been established with my creditors I no longer have to stress about interest charges and late payment fees on my credit cards. That’s the beauty of the debt agreement, it’s frozen so you can actually pay it off over 5 years.

Very few people even realise these options are available to them, yet they are all built into our government legislation and there to help us. For those of you reading this and looking at your last credit card statement, asking yourselves: “at what point should I be worried about my debt?”… You need to contact Castle Debt Solutions if your current situation is similar to the above.