Raising a family on a single income during maternity leave left Beatrice and Luca in financial strife. Using credit to make payments, coupled with childcare costs once Beatrice returned to work, increased their debt. With no assets, the couple were unable to refinance to cover their debts – it seemed there were no solutions. Until they examined the options, that is.
“Credit is the illusion of having means or a financial lifeline”
– Rohan Lamprecht
Beatrice and Luca’s background: Beatrice and Luca had been struggling with credit card debt for years, and it all started after the birth of their second child.
Beatrice was the higher income earner. As a result, the couple relied on credit cards to supplement the loss of her fulltime income when she was on maternity leave.
The debt: After Beatrice returned to work, the couple managed to make repayments on their credit cards. However, they also had to take additional childcare into account, which impacted on their ability to make repayments.
Their unsecured debt level continued to increase, and they began to rely on credit to make repayments. They used the available balances on some credit cards to make the minimum monthly repayments on others.
Within a few years the couple had accumulated around $160,000 of unsecured debt. Beatrice owed a total of $90,000, and Luca owed around $70,000.
The options for repayment: Beatrice and Luca didn’t own many assets, so they weren’t able to refinance the unsecured debt.
The decision to file for bankruptcy: Continuing on with their repayments became impossible once all of their credit cards were maxed out. After careful consideration, they both decided to file for bankruptcy.