Loans For Debt Consolidation, Credit Card Debt Consolidated, Car Finance Loans, Personal Loans

Case Studies

Case Study One

Jonathon is a single male, aged 24, working full time as a chef for XYZ Café and earning approximately $610 per week take home. Jonathon has been with his current employer for only 2 months. Prior to working at XYZ Café, Jonathon was unemployed for a period of approximately 4 month. Jonathon has three credit cards totaling $26,000. Two of the credit cards are now 90 days in arrears and are both over the limit, and one has been defaulted and gone to a credit agency who are demanding full payment. Jonathon moved into share accommodation paying $150 per week in rent. He owns a car which he uses to travel to work valued at $10,000, and the only other expenses that he has are food, a mobile phone, insurance and going out expenses. After paying all his living expenses, Jonathon is left with approximately $95 per week.

Summary of Jonathon’s Situation

Income

• XYZ Café full time earning $650 per week

Debts

• ABC Bank $10,000 Limit is $9000, and Minimum Monthly Payments (including arrears) $270 per month.
• DEF Bank $5,000 Limit is $4000, and the Minimum Monthly Payments (including arrears) $150 per month.
• Was with HIJ Bank, now with X Lawyers $11,000. Limit was $9,000 and demanding full payment.

Assets

• Furniture to the value of $5,000
• Car to the value of $10,000

Expenses

• Rent is $150 per week
• Food is $120 per week
• Phone/Internet $25 per week
• Utilities $20 per week
• Car Running Cost $100 per week
• General Living and going out expenses $100 per week.

Total Expenses $515.00

Jonathon’s Options

1. Jonathon has adverse (bad) credit history
2. The required payment under a Consolidation Loan will be $105 per week. Unfortunately Jonathon does not have capacity to pay this.
3. Jonathon can go back to his creditors and offer a payment plan to each of his creditors. However as he only has $95 per week he can only offer them approximately $30 per week each. This unfortunately won’t even cover the interest which means that he won’t be able to ever pay them off.
4. If Jonathon applies for a Debt Agreement, he will be able to offer his creditors a realistic and affordable payment plan, where if accepted by his creditors he could see himself debt free within 5 years.
5. Jonathon could consider Bankruptcy, which might qualify him from not having to pay anything towards his creditors.

Case Study Two

Andrew and Helen are a couple in their mid 30’s. They have a daughter aged 9 and live in suburban Melbourne. Andrew works full time as a Sales Representative earning $6,000 per month and Helen works full time in administration earning $3,000 per month. They have a Mortgage for $255,000, a Car Loan for $23,000, three credit cards and one personal loan to the total of $28,000. Helen and Andrew have just found that Helen is pregnant and are both worried that when she is off work they only have Andrew’s income to rely on, which might not be enough to cover all the house expenses and provide for a family of three, including a new born child.

Summary of Andrew and Helens situation

Income

• Andrew sales rep job pays $6,000 per month
• Helen administration job pays $3,000 per month

Total Income is $9,000 per month

Mortgage

• ABC Bank has Mortgage over the $275,000. Houses similar in the area are selling for around the $380,000 mark.
• The car loan is with XYZ finance for the amount of $23,000. The car has a current value of $24,000. The minimum payments are $590 per month

Total Debts: $298,000; Total Payments $2,390 per month

Debts

• SAM Bank credit card $12,000 Limit is $15,000. Minimum payments is $360 per month
• DAN Bank Credit card $3,000 limit is $10,000.00. Minimum payments is $300 per month
• STORE Card $8,000 limit is $10,000. Minimum payments is $300 per month
• ABC Bank has a personal loan for $3,000.

Total Debts are $28,000; Total Minimum Payments $960 per month

Expenses per month

• Mortgage $1,800 per month
• Rates $110 per month
• Utilities $180 per month
• Phone / Internet $600 per month
• Food $870 per month
• Medical Insurance $40 per month
• Car expenses $520 per month
• School Expense $120 per month
• Incidentals $450 month
• Payments to Car loan $590 per month
• Payments to Credit Card and Personal Loan $960 per month

Total Expenses $6,240 per month

Combined Income
Surplus $2,760 per month

Assuming we had only Andrew Income
Deficit $240

Assts
Household Furniture $15,000

Andrew and Helen Options

1. Andrew and Helen have a perfect payment history on all fronts. A bank valuation valued their property to be $365,000.00. To combine all of their debts including the car loan Andrew and Helen need to borrow $326,000. The payments on the new home loan will be $2150 per month. The revised budget below considering we only have Andrew income:
   • Mortgage $2,150 per month
   • Rates $110 per month
   • Utilities $180 per month
   • Phone / Internet $600 per month
   • Food $870 per month
   • Medical Insurance $40 per month
   • Car loan $590 per month
   • School Expense $120 per month
   • Incidentals $450 month

   Total Expenses $5,110 per month

   Surplus $890 per month

   As illustrated in the above example even if Helen has to take time off to care for her new child a mortgage refinance will save the family $1,130 per month in payments and even on a single income Andrew and Helen can still be able to save.

2. If Andrew and Helen stay the way they are they run the risk of possibly falling behind on payments and ruining a perfect credit history.

For confidential advice on mortgage consolidation and debt consolidation home loans, bad personal debt consolidation, car finance loans and bankruptcy loans, or to discover how Debt Negotiators’ loans for debt consolidation can freeze and reduce your interest and provide financial freedom, call 1300 351 008 today.