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How to Deal with Debt Trap

While the number of Australians declaring personal insolvency has actually slowed according to recently released figures, many Aussies are battling high levels of debt and are suffering from financial distress. But there are other ways out of a debt trap. These are our top tips to manage debt.


Prior to refinancing consider talking to a credit provider, switching home loans, getting a credit card balance transfer or even selling the house if things are really bad. There are lots of alternative products to choose from if refinancing is considered your best solution.

Consulting with us will ensure we analyse the terms and conditions associated with your current mortgage and calculate what’s needed to borrow for the new loan, we then shop around for a suitable solution, being sure to compare all the different upfront fees.

Manage credit card debt

Simply move to a zero-interest balance transfer card. We’ve found that clients have paid out tens of thousands of dollars in debt within two years of doing this.

Vary the loan

Borrowers should ask their lender to vary the loan for hardship – this is essentially re-negotiating the terms and conditions. In this instance, you are using provision of the Banking Code of Practice. You can effectively have zero payments – a total freeze for six to twelve months.

National Credit Code

You shouldn’t be nervous about using the National Credit Code to alter their loan. All default and penalty interest will cease and you can capitalise on liabilities or any outstanding payments. This could include adding them to the loan or changing the terms of the loan. For example, this could be paying interest only from principle and interest or varying the terms of the loan such as lowering the monthly repayments.


It doesn’t hurt to do some negotiating to get a better rate. Most lenders have wriggle room and after all a lower interest rate means a smaller repayment. We have had a lot of success in this exercise which has seen rates reduced by as much a 0.50%!


This information is current as at 07/12/18.

This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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