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Debt Agreement Case Studies

Credit Card Debt

Just 3 months after Jim and his wife purchased a new home, he lost his job and was unemployed for 7 months. Jim had credit card and store card debts of $82k and he could not service them.

Jim did not believe that it could take him that long to find another job and he was not a budgeting during the first couple of months, he was rather treating the time as a vacation.  Currently, Jim is working, but considering the high interest rates on credit card debt, he is unable to keep up the repayments and still service his mortgage. Jim’s home is valued at $535k and the joint mortgage is $480k. He drives a company car and has no other assets to sell. We devised a budget and established that Jim qualified for a Part 9 Debt Agreement. He is now repaying his credit and store card debt over a 5 year period, interest free.

Jim is now able to service his mortgage repayments again and whilst it will not be an easy 5 years, it is manageable. Jim’s wife is going to change from her part time job to a full time position and with the prospect of the added pay rise over the next 5 years it will be easier for them. Had Jim gone Bankrupt he would have lost his home and would still  have had a debt. His wife would have had the option to either purchase Jim’s share of the joint equity, but was not in the financial position to do so in this case.