Meryl is a single woman employed as a Packing Manager who was struggling with her personal loan, credit card and secured car loan for more than 12 months before contacting Debt Free for help. Meryl was earning $80,000 p.a. which she felt was enough to repay her debts . Meryl’s troubles began when the cost of living went up and her salary remained the same. Meryl was struggling with her every day bills and household shopping and some days Meryl sacrificed eating for keeping money to one side to repay debt.
Meryl informed us that every month she would put most of her pay onto her credit cards and only lived off a small percentage of her income. By the end of the month Meryl found herself drawing ‘cash advances’ from her credit card to buy food. What Meryl didn’t realise is that the ‘cash advances’ attracted a very high interest rate and her efforts were being quickly eroded. Meryl found herself in a vicious cycle of debt which she could no longer control or face on a day to day basis.
Meryl’s accounts fell into arrears and a black mark was placed against her credit file. Meryl applied for a consolidation loan, however, it was refused by her bank as her accounts had fallen into arrears and her credit file had a black mark against it for late payments. Her bank advised her to re-apply after six months if she had cleared her arrears but this is something which Meryl could not achieve.
Meryl’s felt she needed professional help particularly after creditors started to threaten legal action.
After contacting Debt Free, we worked out a sustainable budget for Meryl and established that she could only afford to repay $1,560 per month. This compared to her current monthly minimum repayments of $2,404.80 per month which seh was trying to make. We recommended to Meryl that she should offer the amount of $1,560 per month or $720 per fortnight to her creditors. This represented an offer of 70 cents in the dollar in full over 4 years which in our experience was an acceptable offer to creditors.The 30 cents in the dollar will be legally written off or settled after completing the Debt Agreement.
|Creditor||Interest Rate||Balance||Minimum Monthly Payment|
|Westpac Banking Corporation||12.29%p.a.||$10,032||$305.37|
|Westpac Banking Corporation||19.99%p.a.||$4,397||$141.93|
|Westpac Banking Corporation||13.49%p.a.||$12,273||$295.60|
|HSBC Bank Australia||19.99%p.a.||$8,368||$235.00|
|American Express Australia Limited||24.74%||$5,385||$458.73|
|Westpac Banking Corporation||14.64%||$46,476||$968.26|
Debt Free assisted Meryl with preparing a formal Debt Agreement Proposal and her creditors accepted it after approximately 35 days and it then became legally binding on all parties. This meant that Meryl was now protected by the Debt Agreement and no creditor could take any enforcement action at all. In fact Meryl’s creditors must now contact Debt Free and Meryl can get in with her life.
If you would like to find out more about a Debt Agreement contact us on 1800 98 10 70 or apply online for a free preliminary assessment.