Real Cases & Client Testamonials

Typical Debt Negotiation Scenarios

Scenario 1: Business Owner

This owner approached us on a Wednesday where he had received a notice for repossession of his family home to be executed the next day.

We contacted the Bank and were granted a 30-day extension on the repossession order for us to evaluate the situation.

Background Story:

The client was a tradie who had run his own business which primarily worked as a subcontractor on building sites in Melbourne. One of the builders he worked for went into liquidation during Covid owing our client a substantial amount of money on invoices for work completed in which he was advised by the liquidator that he had little to no chance of receiving.

Our client subsequently borrowed via credit cards, personal loans and unsecured business funding to pay his workers, suppliers and other assorted creditors.

Having all these additional expenses impacting his business he was left with no alternative but to cease trading. As a result, he was no longer able to service any loan repayments and fell into arrears with all his creditors.

On reviewing his Statement of financial position, we determined that the only asset he had was the family home with a mortgage on the property, plus the assorted unsecured loans, the client was significantly in deficit with no equity.

Outcome:

We spoke to various lenders and secured a second-tier lender which was prepared to lend 75% of the property’s value on the condition that all creditors’ claims were satisfied.

We then put forward a proposal to all the unsecured creditors including the ATO. We negotiated a deal where the client saved more than $400K on his loans and commitments as full and final settlement for the finance to proceed.

This enabled our client to retain his family home, have no outstanding debts and move on with his life.

Scenario 2: Relationship Breakdown.

These clients approached us regarding a property they had purchased during Covid where they had secured a minimal equity, interest only loan on an owner-occupied property.

Rises in Interest rates, significant unsecured credit card and personal loans eventually resulted in payment defaults. Subsequently the loan reverted to principal and interest repayments.

This led to the breakdown of the relationship where both partners wanted to exit the property and move on.

Outcome:

We negotiated a Hardship Management Plan with the Mortgagee and other unsecured creditors. All payments and interest were placed on hold for 30 days, allowing us time to assess the situation.

After completion of our due diligence, we ascertained that both parties had approximately $100K of unsecured personal and credit card loans.

We came to an agreement with the unsecured lenders, that the owners were prepared to sell the property which we arranged through our network, and organised a $60K discount on the unsecured debt payable at settlement. This enabled both clients to move on and use the discount to satisfy the Real Estate Agents fees, advertising costs as well as associated legal fees and conveyancing costs.

Scenario 3: Family in crisis

These clients were a young married couple with four young children. A business failure accumulated significant unsecured debt which had been on payment plans with the Banks and Collection Agencies for years.

They struggled to service the payment plans which caused severe financial hardship. The payments didn’t come close to satisfying the accruing default interest, and as a result the debt each year was growing experientially.

The couple were not eligible for finance and were externally advised to enter a part IX Debt agreement.

Outcome:

The client’s family had gifted them $40K which we used to negotiate a reduction of over $90K with the creditors for full and final settlement.

This stopped the exorbitant debt growing and allowed the couple to be debt free.