CASE STUDY #1 – Full Wages Management

*Name changed for privacy

John* is a 48-year-old man, first home owner – purchased his home 15 years ago. he is a boilermaker by trade and earned a very comfortable living until eight years ago when there was a mining downturn in the area and he became unemployed – he spent two years being either unemployed or between jobs until he secured a job as a truck driver for a concreting company and has been there for the last six years. The situation after he lost his well-paying employment created issues with his relationship and they separated sharing joint custody of a child. John* started gambling online and at the TAB leading to extreme debt over $60k in credit cards to support the gambling, cover losses and trying to maintain a living (these are all currently at collection), non-payment of rates (statement of claim) and utilities barely being maintained.

His mortgage was refinanced in the early stages of his money issues from The Greater to Pepper Finance at a higher interest rate. He had reached the limit with support from Pepper having utilised their hardship policy and was not maintaining the subsequent payment arrangement – although his commitment to pay $530 per week repayment +arrears was doomed to fail from inception – it was never a viable commitment he agreed to it because he was desperate to save his home – his take home wage averaged only $860 per week. John* came to us at AFD Loans due to a prior relationship with Denis Hill the Director, essentially wanting to loan more money as a band aid to save his home. John* was initially reluctant to discuss what his real issues were, just that he was in debt and about to have his home taken – as he was only mortgaged to 30%LVR we knew there must be more to the story.

After a review of his credit file and further discussion John* confessed to his gambling problems, the court actions – one in place and one pending and the collection agencies hounding him, he broke down in front of us crying, emotionally exhausted with this financial battle he had been fighting. While this was a monumental situation for him, it wasn’t the worst I had seen or even halfway to the worst so I told John* I could help him, however with a caveat – he had to let me manage his wage, he was not in a position to be trusted with a budget, he had acknowledged gambling and “that next big win” was an insidious driver he had no control over. To manage his debts and creditors into acceptable payment arrangements was going to be difficult but doable, however it had to be maintained exactly to work. The plan was to make all the payments, particularly his mortgage, on-time or in advance for six months and then start working on the refinance of his home to pay everything out. The six-month allowance only period gave him time to re-assess his personal discipline as far as money management and seek help with the gambling issues.

He agreed for his wages to be split – he would get a $180 living allowance and the balance was paid into a trust account that was used to maintain his child support, mortgage, utilities, and creditors as he is a permanent casual he often gets overtime so his personal allowance is occasionally topped up, while still leaving a buffer in the trust account for short weeks at work. I even had his employer commit in writing he would not change this arrangement without discussing it with our office, that this was for John* and in his best interests to maintain. I spent the next weeks talking to his creditors and explaining his situation, working out minimal payments to maintain goodwill, I stopped Collection House from moving forward with a Statement of Claim, even though it gave them security on the debt because being on his credit file as a court judgement would impact a refinance. I helped John* understand Foxtel was not a “need” having unlimited broadband for $120 per month was also unnecessary, we shopped around for cheaper home insurance, bargained a 34% discount on his Energy Australia bill, even convinced Telstra to drop his monthly mobile charge from $60 to $30 by competitor comparing.

I did all of this with John*, side by side, urging him to understand the importance of being in control of his own finances, helping him acknowledge that planning and managing in advance rather than just living week to week took away the unknown, the stomach churning nausea of being hit with a bill, or a disconnection, or a judgement claim out of the blue. Currently $680 per week is parsed out on John* behalf to maintain his commitments at bare minimum. This is days, months of work and will continue for the next six to twelve months – I meet with John* weekly go over his payslip, bills and work through his statement, so he knows exactly where everything is at and he is a participant in his own growth, John* has stepped up, taken on the responsibility and ownership of his position and asked for help.

Our clients are more than a loan or a refinance, more than income to us. The trauma of not being able to manage finances impacts the lives of people in ways not readily visible, the flow on to Johns* son as he looks at his own future can go two ways, success or failure – John* wants to be “in his words” an honorable role model, leave a legacy for his son, the home he bought in the area he grew up in, where his son is now growing up. Going to battle with the refinance is to come and we will take that on when its time dealing with servicing, credit reputation, debt history and lender policy – it is never ending and difficult, but it is needed and too readily able to be dismissed as too difficult.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *