“Opportunities multiply as they are seized”

– Sun Tzu

Paul’s background: A few years ago, everything was going really well for Paul. He had a great job, money in the bank, and a manageable mortgage. He was happily partnered with a baby on the way. Everything was perfect… until all of a sudden it wasn’t.

Paul’s relationship broke down. After months of trying to repair it, he and his partner decided to separate.

He and his partner began discussions with solicitors in respect to their marital assets and custody arrangements for their newborn baby. At the same time, Paul found himself having to rent a property in addition to maintaining the mortgage.

The debt: In the meantime, bills had started to pile up, including the solicitor’s fees. After using his savings, Paul turned to credit cards and personal loans to help him get by.

At the time, Paul wasn’t too worried about the unsecured debt he was accumulating. He thought he would be in a position to pay it all off once he and his partner sold the family home and he received his share of the proceeds. At least, that was the plan anyway.

The court rulings: After almost a year of proceedings in the family court and $150,000 of unsecured debt later, Paul’s ex-partner was awarded more than 70% of the family home.

His ex-partner managed to refinance the property into her name and paid Paul his share, however, this gave Paul less than $50,000. He used some of this money to pay down his unsecured debt.

Paul’s ex-partner also retained the majority custody of their child, and so Paul found himself being ordered to pay child support totalling $20,000 per annum.

The decision to file for bankruptcy: Despite earning a good income, Paul’s debts left him unable to continue with his debt repayments while also meeting his living expenses and child support commitments.

After exploring the options available Paul decided to file for bankruptcy.

How bankruptcy helped Paul move forward

  • Paul cleared his unsecured debt, which totalled roughly $110,000
  • His outgoings were dramatically reduced. Because he was earning $150,000 gross taxable per annum, he had to pay some income contributions towards the bankrupt estate. However after his trustee took his child support liability into account, Paul had to pay around $14,500 per annum. Monthly, his repayments went from around $3,000 towards the unsecured debt to only $1,200 in income contributions. This increased Paul’s available income by almost $2,000 per month
  • He was able to retain all of his household contents, furniture and super as they were protected in bankruptcy
  • Although it was under finance, he continued on with his repayments and was able to retain his car
  • Paul received a listing on the NPII, the federally kept record of personal insolvency, and his credit report will be impaired for a total of 5 years. While this will make it difficult to borrow during that time, Paul is now saving money and using the time to rebuild his life
  • Without the debt holding him back, Paul could begin to move forward with his life
  • He felt that a weight had lifted from his shoulders, which made it far easier for him to enjoy fatherhood
  • Paul even managed to start saving money again, with plans of going on an overseas holiday with his son