Journey out of unmanageable debt
David’s story*
The circumstances
David was a franchise owner, but his business was severely impacted by the Global Financial Crisis and never fully recovered. The franchisor repossessed the business along with its assets, leaving him with a large, unmanageable debt to the franchisor, as well as credit card debts, guarantor debts, and a remaining shortfall on a repossessed car loan.
Due to his failing franchise, David also lost his home while trying to manage the mounting, unmanageable debts.
The Problem
David was struggling with unmanageable, unsecured debts totalling $90,596. With a combined household income of $88,787.92, they estimated it would take them the rest of their working lives to pay off these debts.
Although David considered bankruptcy as a possible solution, he realised that declaring bankruptcy would negatively impact his employment prospects. Even with his current income, he would exceed the threshold for bankruptcy and would still be required to make financial contributions during the process.
Here’s a snapshot of David’s outstanding loans:
DAVID’S DEBTS
| Description | Balance | Min. Monthly Repayment |
| Franchisor | $39,681.00 | $stopped paying |
| Accounting Fees | $1,437.00 | $stopped paying |
| Credit Card #1 | $5,884.00 | $80.00 |
| Credit card #2 | $15,859.00 | $480.00 |
| Credit Card #3 | $23,447.00 | $500.00 |
| Defaulted Car Loan | $4,288.00 | $stopped paying |
| Total | $90,596.00 | $1060.00 + the debts he had stopped paying |
The fix
David was fortunate to be referred to Safe Debt Management by a bankruptcy trustee. Since his income and liabilities met the necessary criteria, Safe Debt Management assisted him in establishing a Debt Agreement. This agreement is a formal arrangement between David and his creditors.
As a result of this Debt Agreement, David made low and affordable payments of just $100 per week. Under the terms accepted by his creditors, he was only required to repay 29.7% of his total debts. By 2023, David had become debt-free as the remaining balance was discharged, and he owed no money to his creditors.
Thanks to this arrangement, David was able to maintain his job and manage repayments on his second car loan. He successfully cleared all his debts in seven years by paying a total of $27,335 to his creditors.
To take the first step out of unmanageable debt – contact us today for a FREE debt assessment.
*David’s identity and case details have been altered to protect his privacy. This information and calculations are for illustrative purposes only but reflect actual cases.