Terminating a debt agreement
Jai lives with his partner of 10 years and their two young children in a rental property in Perth. They have no assets other than household furniture, personal belongings and a jointly owned car worth $7,000.
Jai spent his early 20s working in the mines in WA earning a very good wage. He resigned when his first child was born, and got a job as a factory hand, earning much less. Jai started to find it difficult to maintain repayments on his bills.
He saw an advert on TV about debt agreements and called to talk about his options. The debt agreement administrator suggested a debt agreement would work well for Jai’s situation. He entered into an agreement to pay back 80% of his debts over a three year period.
Eighteen months into the debt agreement, Jai was still struggling financially. He found it difficult to maintain the payments to his debt agreement administrator. His relationship began to suffer and he had to take time off work due to the stress.
After seeing a free financial counsellor, Jai decided it would be best to terminate his debt agreement and file for bankruptcy.
He contacted his administrator who prepared the termination paperwork and lodged it with AFSA. AFSA completed the process to terminate the debt agreement.
Jai then applied for bankruptcy. AFSA wrote to his creditors to tell them that he had become bankrupt.
Jai now knows more about both debt agreements and bankruptcy. He went into a debt agreement with good intentions, but can now see that bankruptcy is the best option for him and his family.
*These case studies do not constitute legal or financial advice. You should consider whether the options referred to in the case studies are appropriate for you, and seek advice if necessary, before taking any action.