Debt Agreement Case Study
John and Jocelyn had been struggling to pay their personal loan and credit card debts for over 12 months. Their problems started when John was retrenched about 18 months ago and it took him 5 months to find another job.
During this period when John was unemployed, their creditors did not receive many repayments and despite their circumstances, some creditors lodged defaults on their credit reports and finally threatened legal action which included garnishing John's wages.
John and Jocelyn had been unable to bring their personal loan and credit card accounts up to date. All their loan accounts were in arrears and they did not have the money to pay them off. Their debts totalled $32,800. Their minimum monthly repayments were $1,150, however, they only had $410 left over each month after they met their living expenses. Both John and Jocelyn wanted to repay their debts and did not want go bankrupt. A snapshot of their loan accounts showed the following:
|Loan Account||Interest Rate (%)||Balance||Min. Monthly Repayment|
Fox Symes assisted John and Jocelyn in the preparation and submission of a Debt Agreement. A Debt Agreement is a formal arrangement between John and Jocelyn and their creditors.
The Debt Agreement would mean John and Jocelyn would have to pay $410 each month for 4 years to their creditors. In total they would pay their creditors $19,680. Their creditors would agree agreed to waive all interest on their debt and accept $19,680 of the $32,800 they owed or 60c in the dollar as full and final settlement of their debt. At the end of 4 years John and Jocelyn would be debt free.
With the assistance of Fox Symes, creditors approved the Debt Agreement. Fox Symes is the largest provider of debt agreements in Australia.
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