Escaping from the debt trap

Was it Solomon who said that the borrower becomes the lender’s slave? Today it is very true for those whose debt becomes unaffordable due to interest rate rises. What to do if your bank has you trapped in a high priced home, business or farm mortgage that may become more expensive, putting your home at risk through default. By law I can’t tell home-buyers  or other consumers for a fee, so I’ll tell you for free.

1 How did it happen
Banks and other lenders knew interest rates would probably rise from historic lows. By offering cheap mortgages for very expensive housing as well as for businesses and farms, they knew that as rates rose buyers would be trapped in unaffordable mortgage debt. Then they could nurse the borrowers along like pet rabbits destined for stew.

The interest they earn will grow with rate rises to give huge returns. Borrowers will slave away to meet repayments. Unmet interest can be added to the debt to earn more interest. If after a decade the debt gets close to the home value, the lenders can move in and sell the borrower up, absorbing the difference between debt and sale value by unbelievably high foreclosure charges.

On Monday I will start explaining the best options for borrowers to escape this carefully laid trap.

Caesar’s rule was brutal in the extreme

How lucky we are not to live in Christ’s time. But Caesar was not the only brutal dictator in history, so it is worth our while to make our democracy work well, lest a dictator appear again. The link below is worth following on that theme. Christ gave us some very wise advice. It pays to apply it to our democracy.

Disaster stalks society
Australia is walking a thin line between dangerous inflation with massive price hikes and dangerous recession with massive unemployment. Government services are already grossly inadequate for our exploding population and voters are suffering. Violent crime and murder threaten our lives. Regulators conspire with corporate crooks and businesses. Companies are failing and cutting staff. Banks cheat customers.

Driving democratic government
We are not ruled by a ruthless dictator but it could happen as it did in Germany. The people rule in Australia! They drive government via our elected parliament. Australia has a Voters Network, free of party politics, that gives enormous power to every individual Australian, young, middle-aged or old, who want to help drive government to do what they think is good and fair for them and our society. It has done so for 37 years. If you wonder why government is not doing what you want, chances are you have not joined Voters Network and told parliament what you want and why.

Bullies & bribers greedy and dishonest
Our Government is not really driven just by political parties. Greedy ruthless dishonest wealth-seekers bully and bribe our politicians to get a bigger share of our national wealth. We voters all need to stand beside our MPs, support and guide them to do what WE need and Australia needs, instead. When we all share the time, effort and costs, they are tiny. If each person involved contributed as much time and money as they might on a weekly cup of coffee, Australia would be a far better place for everyone.

Get involved and improve your life as well as Australia’s
 Democracy is about control of government for voters via the Parliament  of politicians who are far, far better than the media will ever let you believe. As a voter you too can and are entitled to, guide government to do what YOU want via our parliament. Australia needs your input for good government. The best way for you to  do your bit for Australia is to join Voters Network free and help campaign for what you see as needed.

Businesses Brace for Battle with Banks

“First to boom and first to bust” -the construction industry.

Road to Recession
Australia was moving dangerously closer to recession prior to Covid. To stimulate the economy by encouraging Australians to spend, the Reserve bank lowered interest rates. However debt is the very worst and most dangerous way to spend money. It is money that you don’t have to spend!

But Australians refused to be drawn into debt, having glanced what was happening elsewhere in the world. Lower and lower fell interest rates, but still Australians refused to borrow for fear of bad times ahead. So rates fell further to entice them.

But then Covid hit and to stop the economy from “tanking”, the government threw billions of dollars at the Australian people and at businesses in particular. Too much perhaps as it turned out. With enough for deposits and interest rates at unbelievably low rates, people rushed into borrowing for businesses, investment properties, farms and homes, cars and yachts, trips abroad. Prices skyrocketed with a bit of help from Russia to cut supplies. Debts skyrocketed along with them.

The low interest rates were too good to be true. It is said that if it is “too good to be true” then maybe it isn’t. Maybe it wasn’t. The interest rates started to skyrocket too.

When we bought our home the mortgage interest rate was 11% fixed for 25 years. The difference was that prices were very much lower even allowing for CPI. It was the same when we bought or expanded businesses and farms. The ultra-high prices as the growing Australian population recently moved into spending mode, meant that the interest was being charged on very high loans and so was very high itself in dollar terms.

What to do – Act early and fast!

There is a Christian perspective in all that we do, so crisis time is a time to reflect on Christ’s teachings. Proverbs has a brief warning “The borrower becomes the lender’s slave.” How true that is for many borrowers today as the media refers to “Mortgage Prison”.

Christians may need to seek assistance or give assistance. The Good Samaritan story guides us and Christ’s warning not to judge others is pertinent. Crisis time is not the time t decide whether someone was unwise to get into difficult debt that puts their business, farm or home at risk. It is time to help. Even a staid Chartered Accountant like me found that in an earlier recession in my younger days I faced a cash crisis with  large staff and clients battling to pay. With a big home mortgage to pay I could not go to the bank so in fear and trepidation I asked two friends if I could borrow $10,000 from each. They happily and kindly said yes. I survived and the loans were repaid within a year as my clients were able to pay their bills. It was a great act of kindness. Neither loans were secured or documented except by  brief note.

Keep a look out for anyone you can help in any way possible. That is what being a Christian is about and it may help us remove the blot on the Christian copybook caused by some totally inappropriate past behaviour in some churches.

Back to businesses bracing for battle with banks:-

Professionals are not likely to help you if it looks like you or your business will be facing bankruptcy or receivership within 6 months, as there is a serious risk that any fees you pay them could be clawed back by a liquidator or trustee in bankruptcy. So act early to get assistance or you may miss out.

Loans are being extended to cut the regular repayments, but that will increase the actual cost of everything bought on borrowed money, as more interest will be charged and the debt will go longer.

If you spend like mad in your business or privately, the economy might move ahead, or it might go backwards. If you spend up you might help Australia. If the economy goes back, then you might go broke yourself.

Many business people and consumers may decide to protect themselves first. Some have already done so. As consumers they may cut spending to bare essentials; buy only what is on special; take on extra paid work; make rather than buy. Businesses might cut spending to the bone, cutting staff, rent, marketing and that will impact the incomes and profit of other businesses, putting pressure on them to cut spending.

Debtors and creditors
Every situation is very different. For those businesses contacting GBAC we will assess the situation of each business’s debtors and creditors, then talk to them to calm them down. We ask debtors to pay as much as possible off their debts. Cool calm discussion is required to deal with a difficult situation as well as possible for all concerned. Panic is not going to help anyone. Nor is drowning your debtor customers when trying to keep yourself afloat. That can drown everyone. Treating debtors and creditors as you would like to be treated yourself is a good guide. Businesses in cash trouble need to recognise their issues and look for the best solutions.

We will talk to creditors promptly and work out repayment plans that the business can afford and which also help the creditors. They don’t want to send their customers broke. They just want to survive too. Recessions don’t last for ever. Everyone must get through if they can with feasible repayment plans.

Billionaire Bankers
Can they afford to help their customers?      Of course they can?
Will they?    GBAC has persuaded banks to help loan customers all over Australia for 36 years. It takes research, assessment, leverage, persuasion, experience, skill, strategy and technique, dedication to outcomes. Our aim is Good Banking for Australian Customers. Without customers banks can’t survive. Customers can easily move banks to get a better deal. That is what our Borrow Better service is about.

We start by reviewing the bank loan and overdraft accounts and their documentation to see whether the fault lies with the business or the bankers. Often it is the bankers’ fault. They are the financial experts. They know best when to borrow and when not to; which companies can handle what debt and which cannot. Once the situation is clear then GBAC opens discussions with the bank to see how best to resolve the situation with as little as possible damage to the business or the bank.

There are almost always reasonable solutions to any cash or loan repayment crisis. But the sooner they are tackled the more likely is a good solution. Borrowers sometimes get introduced to banks for loans like lambs led to slaughter, by highly paid bank mortgage brokers. The loans often do not match the customer’s needs, cater to economic recessions or ensure ability to service and repay.

GBAC never works for the bank. It always works for the customers alone.

The faster you contact GBAC for assistance the sooner your stress levels will settle and sensible solutions will be identified. As well as helping bank customers solve debt problems, we have run our own businesses and farms, so we know just what it is like to battle bank debt, creditor payments, debt collections, recessions and falling profits. We are now here to help you because we do care about your future.

It will cost you nothing to call GBAC today on 0428 417 496 or 02 9988 3312 for a chat about what is stressing you about your mortgage-secured business or farm loan. We also offer the first hour of actual work on your issues completely free as our small contribution to helping the Australian business and farming community out of a very dangerous situation with their biggest assets on the line.

Banks make billions. Borrowers bear the burden! That’s not fair!!

I think it is in Proverbs we read “The borrower becomes the lender’s slave”. Sometimes borrowers feel they have been beaten up and left by the roadside, so we are tying to do our Good Samaritan bit in a small way. Things are a bit tough for some just now with rates rising so quickly in Australia.

Borrow Better, launched originally as “Moneygrams” in 1987 for $100 ($250 today), helps borrowers contact more lenders for more competitive mortgage loans.

As it is not a “broker” there is no $7,000 or whatever brokerage bill for the lender to build into your loan interest and charges. As Borrow Better lets banks bid for your loan business and you to negotiate for the best possible rates and charges business owners and farmers can do quite well out of it.

One borrower in 1987 saved $300,000 interest for his $100 investment. Dropped his interest rate on a 5 year $1m loan from 24% to 18%. Good to remember that what goes down can go up and interest rates are relatively low.

But those who borrowed at very low rates and are suffering from the increases that the bankers must have known would come, need and deserve whatever help they can get.

For that reason and due to the current cost of living crisis Australia-wide, Borrow Better is being temporarily offered free for businesses and farmers. Make the most of it to get the best deal whether borrowing afresh or refinancing.

Banks will always charge you the highest rate you will pay. That is how businesses sell their products and services and how farmers sell their livestock and crops too.

Competition brings interest rates and charges down.

The Borrower becomes the lender’s slave – Proverbs

There is talk about “getting out of mortgage prison” today . But it is really a “Debt Trap” set by skilled moneylenders who knew the rates would rise from historic lows to trap unwary borrowers.

The last people a small business owner would ask for the way out would be a free financial counsellor funded by those same moneylenders, because that might be the most expensive way out.

The best way out is to turn the tables on the moneylenders. Sound familiar?

Find out what they have done wrong then convince them to open the trap-door or endure yet another scandal.

GBAC came into being when Politicians let Banks avoid regulation in the 1980’s. It was necessary because they saw they could make billions and earn multi-million dollar salaries by screwing borrowers. GBAC helps borrowers screw them back, in the nicest of ways.

Votergrams beat protest any day (Ask and you will receive)

Recent riots, the downing of a Federal Senator by Police, protests and counter protests illustrate perfectly the wrong way for people to attempt to influence democratic governments such as we have in Australia.

Protests offend the very people who can help most, are often more about discrediting a political party than gaining change. Protests are, like strikes, a form of bullying. Their appeal is that the protesters have the feeling of unity, a feeling of being an untouchable gang.

Voters hold enormous power as can be seen by the way the major parties are carrying on in NSW with an election imminent. Pork Barrelling prevails. Promises are about $30 billion in return for votes.

If voters vote to get those promises, that encourages government to not provided any of the infrastructure or services that we need during the parliamentary term and hold them all up until the next election when they can be rolled out.

Let Voters Network know, if you think there should be no grants during the 12 months before any election, or make your alternative suggestion.

Vote on past performance of the politicians and parties in question. That is the best guide to their future performance. Promises are easy. Action is much more difficult.

Many voters holding that influential Votergram Voice in their hands that every single voter has, often take the last century option of surrendering that power to some organisation with the expectation that it will have more power than they do. But of course organisations do not get to vote in state and federal elections, so that voting power is neutralised. Sometimes thousands of voters do that and their Votergram Voices, which would persuade almost any government on any issue, are neutralised by the organisation that has no vote. But the organisation does often get government funding, which neutralises it too.

Votergrams are superb used by individuals, but they are even better if used by organisation members to add electoral power to the fundamental logic of the arguments put by their organisation. One national organisation and its members scored $45 billion of government support through a joint campaign effort.

The moral of the story is that you get more support from politicians by polite persuasion than by protest. Votergrams put Australian voters light years ahead of any other democracy in the world.

Put “protests” in the rubbish bin and Votergram your way to a better life by guiding government to do what you want.

Supercharge Your Voter Voice

Full page ad in the paper today by GetUp and some of those 1 million Aussies happy to delegate their political power and influence to the one skilled and strong voice of GetUp.

Because Lord Acton said “Power tends to corrupt”, Votergrams, on the other hand, spread it around all over Australia. That is less corrupting and more gently persuasive, as it comes from actual individual voters in many electorates who are able to campaign in other electorates as well as their own.

Because our Lord said “Ask and receive” it is also the most important factor in our Australian democracy. Most people angry at or disappointed in government have never actually asked every Member of Parliament to do what they want done and explained it carefully. They have neither “Asked” nor “Knocked on the door” of Parliament, figuratively speaking.

The other 16 million Aussie voters not in GetUp have Turbo charged Votergram Voices instantly available with which to ask with  great likelihood that  they will be given what they ask. They retain in their own hands power over each issue of interest to them.

Votergrams multiply the voice of each Aussie voter by the number of MPs to which it is delivered directly. That can be up to 600 MPs in all parliaments.

We know that a V8 generally has more power than a straight 4 and turbocharged V12 has even more. The Votergram to Federal Parliament is a V225. To NSW it is a V130.

Members of Parliament are the heroes of our day and the foundations of our democracy. It is so easy to criticise them, but so few of us would try to please 5 million NSW voters or 17 million federal ones all at the same time on any one issue, let alone all the time on all the issues. Protests are about confrontation. Votergrams can claim over 4 decades of cooperation between voters and their elected parliamentary representatives. It has worked very well and very pleasantly for all concerned. Differences can be discussed and resolved. Nobody is insulted or bullied.

Only a certain number of voters and a certain number of MPs will be interested in any one issue enough to seriously do something about it. Some issues seem mountainous and immovable. Many move under gentle pressure.

The majority of those MPs interested in any one issue can usually be persuaded by the majority of voters interested in that issue, provided that those voters  clearly ask for and explain  fair and just changes or assistance. Polite, persistent political persuasion in the privacy of Parliament Pays off.

Next time you want to exercise your Voter Power, raise your Voter’s Voice and influence society of some section of it, let your Votergram voice be heard in the corridors of power by the most powerful people in the country. Don’t hide your light under a bushel. The parliament won’t see it there.

The Good Samaritan was a Life changer. You can be too!

Anyone in Australia reading the newspapers watching TV or going on line would realise that the world and the Australian part of it particularly is mired in problems at present.

How staggering in one of the greatest periods of affluence that we have ever seen.

Many are unhappy with governments yet unable to work out how to improve what those governments do. We have a new federal government and NSW is just heading to an election.

Out taxes are being used as “vote bait” by major political parties. How tragic is it that political parties in power of all persuasions make the voters suffer neglect in between elections so that they can announce popular policies just before elections to win votes in marginal seats.

And how annoying that the opposition waits until just before elections to promise huge spending of our money for the benefit too of those in marginal electorates so that those voters will vote for them. But the fault is ours if we vote in return for payment  by way of services with out own money.

Ignore the promises. Vote on past performance.

There is a solution. Ignore the election promises which may well not be met anyway. Vote simply on the basis of how our own local MP has performed, regardless of party. Unless we go into a marginal electorate, it is only our local Member who we elect. The better that person is the better our government and society will be.

Majority rules

But Christian influence goes far beyond elections. After the election any voter prepared to do a bit of work, can “dare to be Daniel”. Today there are no lions to be scared of. Governments value our input on all matters as that lets them know what we want done. Politicians want to stay in parliament more than anything else and so that is what dominates their lives and policies. But we must tell each and every MP what we want done because democracy is a majority based system of government. We need to win a majority of those interested in our issue.

Voice + vote = influence

Christ has provided all the instructions for Christian influence in democracy. Of course God knew we would have democracy now. Perhaps it was God who gave it to us. Let us use that influence to shape the sort of society to which Christ pointed.

I developed the highly successful Votergram service from the parable of the sower; the widow knocking on the judges door until he delivered her justice, the good Samaritan and Joshua and the walls of Jericho to name a few. I have established Voters Network to share the application of what Jesus taught, to modern democracy. Jesus said that with faith we could move (metaphorical) mountains and indeed by applying His teachings I have found we can. How else could we have  cut the road toll per 100,000 by 70% or had smoking banned on airlines around the world?

For those who want to run political persuasion campaigns to achieve fair outcomes, we have established both Voterlobby as a fee based campaign management service and FairGO as a community NFP donation funded campaign management service.

Contact us and help make Christ’s teachings a reality toay.

The 2023 Potential Debt Trap

Beware of the bank

Solomon said “The borrower becomes the lender’s slave.” How true that can be.
Bankers in particular knew that ultra-low interest rates were unlikely to last for long without a recession or depression, as did most accountants and economists. The rates would probably rise instead. This would apply equally to a home loan, farm loan and business loan.

Most business loans and farm loans are for between 15 and 30 years. Most home loans are for 30 years. So borrowers are in there for the long haul and a lot can happen to interest rates in a year.

If in 2023 Australia goes into recession or depression, the properties providing mortgage security for loans would probably collapse and many borrowers would not have the assets to make up the required security. The other impact of a recession is worse, loss of jobs and income. The bank might try to foreclose and sell the property up. Those borrowers could lose all their hard earned equity in their home, business or farm.

If on the other hand interest rates continue to rise, the borrowers may find that they cannot afford the increased repayments. There are plenty of million- dollar loans out there throughout Australia. Each 1% increase in the interest rate on each $1m of a loan costs the borrower $10,000 a year.

To survive, the borrowers would have to earn an extra $10,000 in net disposable income. That is an extra $10,000 in pay-packet or an extra $10,000 Net Profit, per million dollars of the loan or a similar reduction in spending. But rising interest rates can be synonymous with inflationary increases in prices, so to earn extra net disposable income could be a serious challenge. If that happened, many borrowers would again be unable to meet the loan repayments.

Because the banks had already been clever enough to issue a variety of loans that were always unaffordable from the start, there is potential for a mass of debt defaults in 2023-2025. In these cases the banks could foreclose and overall mostly recover close to the amount they had loaned out, maybe even more because accumulated unpaid interest can take a debt way beyond what it started out as.

Profit before principles – always
The big four banks, having earned $2.8 billion dollars profit last year between them, could afford to lose a bit here or there. The borrowers given potentially unaffordable loans would not be so lucky.

Of course, there are some excellent smaller banks and bank staff at non-executive level are mostly very helpful and honest people.

Just to ensure that they were in control, the bankers had legislation passed by the last Federal Government to prevent many consultants from helping borrowers, particularly home buyers and other consumers. These borrowers are restricted by law from getting help from almost anyone not in the pay of the banking and financial services industry. Lawyers are an expensive exception. The aim of the banks is to send people to financial counsellors who receive bank funding and are not known for getting dishonest banks to write off debt that has been fraudulently created. The alternative is to receive assistance from the moneylenders’ very own industry body called AFCA which is so blatantly working for the banks that until recently the most compensation they would award was a maximum of $5,000. Recognising their own dishonesty AFCA, as the result of a critical review of its operations following the Banking Royal Commission, has increased that to $2 million. But it has not gone back over past cases to re-assess compensation and increase amounts from $1500 to $15,000 or even $150,000 when that was the damage done by the bank to the borrower.

Even restricted free speech
The bankers have even successfully banned free speech in Australia with the Credit act preventing any paid consultant outside of the ruthless, bullying bank-controlled circle of “dispute resolvers” from even speaking to a borrower about dishonest bank action or speaking to the bank about it on behalf of the borrower. “We have ways of resolving your dispute”. Indeed the bankers do!

The banking industry has stitched up control  so that it can continue to rob, defraud and deprive borrowers just as it did before the Hayne Royal Commission exposed its dishonest practices and issued multi-million dollar fines. I don’t think it sent one bank director or CEO to gaol. Yet a woman who stole $2m from nab was quickly sentenced to imprisonment. Crooked bankers are well protected from gaol no matter how much they steal from or defraud Australians.

Batting for the borrowers
For the past 35 years since de-regulation, GBAC has worked steadfastly with business and farm borrowers, to have their banks write off unreasonable amounts of debt that were created by the bank’s improper lending practices, lies, deceit or totally inappropriate loan management. We have done that by working with those banks to carefully explain to them what they had done wrong and the impact it that had on their particular customers. The banks, some very willingly, and some very grudgingly, have paid up to compensate their customers for the damage caused to them by the bank’s action. We have had 100% of two debts written off and $5 million written off another. At least one bank CEO has been most helpful and really does care about his customers.

However, profit is key to bankers and that comes largely from charging customers more for the services, than it costs to provide them. People in Rural and Regional Australia and in the suburbs know about that. After the Royal Commission some of the banks had to come up with a clever way to continue to rip off their customers and they have found, in the Credit Act and AFCA, a way to do it.

However, we have very good parliaments in Australia, despite the impression often given in the media. The parliaments are our source of fairness and justice. Borrowers worried about how they will manage their loans throughout the years ahead will be able to easily take their cases to ALL parliamentarians by sending Votergrams to MPs.

Act Early
Meanwhile all borrowers might look closely at how to minimise risk by increasing their loan terms by some years to reduce the principal amount that is included in each repayment. They could also look around to see what cheaper loans might be available if they needed to refinance in the face of a bank demand for full repayment of the loan. LoanApps can help with that. It may, if possible, also be wise to cut expenses and do everything possible to increase income.

None of us knows what the future holds, but the Girl Guides and Boy Scouts have a great motto that could be followed to advantage  by borrowers. It is “BE PREPARED”. I have found it invaluable in the farms and businesses I have run, as well as for helping those we consult.


Voterlobby Validates Democracy

There is so much talk about democratic disasters. Australia’s unique Voterlobby protects voters against such chaos by helping interested voters and politicians work together for the good of society. What are big problems for voters can easily be solved by politicians.

Examples road toll down by 70%, no-smoking on airliners; community pharmacies supported; ski resorts saved; classrooms air conditioned. As long as voters play their part it works.

Many voters have not yet realised that good government requires input from them. They actually know what is wanted and needed in their areas and lives. Politicians have proved remarkably keen to assist with good ideas put forward by voters.

Voterlobby has for the past 36 years given interested voters control of their society with a stunning portfolio of successes.

Around the world many claimed “democracies” have proven to be dictatorships. In others, electoral results have been questioned. This suggests that electoral results should be independently audited by major accounting firms.

But election results are not of that much interest to Voterlobby voters . They know that whoever is in power, enough MPs are likely to assist them to achieve their goals, provided that they are fair and reasonable towards the population and help those who need to be helped.