Case Studies

The following case studies are based on real people's situations and show how a Debt Agreement worked for them.

Case Study I

Denise, a single mother of two, working part time, never had a lot of money but was always able to make ends meet. That suddenly changed four years ago, when her son suffered a bicycle accident. He recovered, however he needed ongoing physiotherapy up to three times a week. The waiting list for the physiotherapy outpatient service at the public hospital was over 6months and her son needed the treatment straight away.

She knew that she could not afford the money for private physiotherapy out of her weekly income and tried to raise the $3000 needed with a series of fruitless applications for bank loans.

"One day I had been at the bank crying to the manager, who said no, and I got home to find a letter from the same bank saying I was a wonderful customer and would I like to double my credit card limit from $2000 to $4000. I was like 'yes'"

The increased limit was quickly eaten up with regular phvsio sessions and then he needed special sessions with an Occupational Therapist to get his handwriting back to the standard required for him to go up a class at the end of the year.

"Faced with taking the credit or letting your son walk with a limp for the rest of his life and go backwards at school, who wouldn't take the credit?"

But meeting the repayments became harder and harder as over a four-year period Denise's debt on three credit cards and a personal loan climbed to $25,000 and she had fallen into the common trap of using one card to meet repayments on another.

"Every month it was just getting worse. It was the interest and over-limit fees which really did it. All my money was going on the monthly card repayments. I would get ill knowing it was getting close to the time when the bills would be coming." Three months ago, she responded to an ad from debt Consolidation Company, which negotiated a Part IX Debt Agreement with her creditors which will see her paying $240 a fortnight over the next four years.

Denise says it was a more attractive option than bankruptcy because "this way you keep your self-respect and can sleep at night. I don't worry about picking up the phone or opening the mail like I used to. We still have to watch what we spend... but there's a light. You know it's going to come to an end."

Case Study II

James and Jacqui had been struggling to pay their personal loan and credit card debts for over 12 months. It all started when James was retrenched about 18 months ago and it took 5 months to find another job. During the period when James was unemployed, Jacqui's wages were only enough to cover their basis living expenses. Their creditors did not receive many payments and despite their circumstances, some creditors lodged defaults on their credit rating and threatened legal action.

All their loan accounts were in arrears and they certainly did not have the money to pay them off. Their debts totalled $17,800. Both James and Jacqui wanted to repay their debts and certainly did not want go bankrupt. A snapshot of their loan accounts showed the following:

James and Jacqui needed help or they were going to continue to backwards and never get enough money so they could save for a deposit for a house. They decided a Debt Agreement was they best way forward. They understood that they couldn't have a credit card or apply for a personal loan whilst they were under the Debt Agreement, but they had tried to get a personal loan to consolidate their debts and no-one would give them one, so they were not worse off. They also wanted the interest to stop accruing as this was the hardest part of their situation. The Debt Agreement froze the debts and this meant no more interest.

The Debt Agreement would mean they would have to pay approximately $370 per month to their creditors and would be debt free in approximately 4 years. This was a saving' of $320 per month and $7,000 in interest repayments!

This Fact Sheet is meant as information and not legal advice and should not be interpreted as such. The information regarding this subject matter may vary from state to state and it is therefore advisable to get legal advice where necessary. The Case Studies are representative only and are not to be considered as standard. Each situation is different and repayments are calculated on an individual case by case basis.