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Case Study: Business Failure

Harrison started his own landscaping business 15 months ago after working as employee in the industry for several years. 

He borrowed some capital as a personal loan to fund the start-up and planned to use savings to live on until the cashflow built up and stabilised.

Unfortunately this didn’t happen and once Harrison’s savings ran out he turned to credit to makes ends meet for both business and personal use.

He fell behind with repayments and started receiving collections calls. 

He was declined for a Debt Consolidation Loan and advised that he did not meet his lenders criteria for Hardship Assistance.

Harrison faces the reality that the business was not going to be able to support him and he must close it down.  He still has ambitions to run his own Company in the future, as well as home ownership, so is keen to avoid Bankruptcy and the lasting effects of that action.

Harrison gets his old job back on a PAYE basis and then re-applied for a Consolidation Loan;  he was again declined, this time due to defaults on his credit file and short-term in current employment.  He re-applied for Hardship but as he has secured a new job, is still ineligible.  The collections calls are becoming for insistent and aggressive.

A friend suggests that he contact Life After Debt ® to find out what his options are.



Minimum Payment

Personal Loan


$850 per month

Outstanding Tax Liabilities


$325 per month

Credit Card #1


$336 per month

Credit Card #2


$111 per month

Various Trade Bills/Creditors


$150 per month



$1,772 per month

An overview of Harrison’s debts

Debt Agreement Solution

Life After Debt ® advised that a Part IX Debt Agreement would likely be the best option.

Harrison was made aware by Life After Debt ® that;

  • A Debt Agreement is a compromise on unmanageable unsecured debts which enables the individual to avoid Bankruptcy. All unsecured debts *including his tax bill* must be included.
  • If the offer is accepted, he would have one manageable repayment based upon what he can afford, rather than what each Creditor is demanding.
  • He would have protection from any further collections harassment, legal or recovery action.
  • Furthermore, the interest on the debts is frozen.
  • Not all Creditors have to agree to the offer for it to be accepted. The outcome is decided by the majority of creditors in dollar value.
  • A listing would be placed on each credit file which would remain there for 5 years and his details would be recorded on a Government database called the NPII.
  • As the Administrator, Life After Debt would receive an administration fee which would be deducted from the contributions to Creditors.
  • As the Debt Agreement is processed by a Government department called AFSA, they would receive a realisations charge which would be deducted from the contributions to Creditors.

Debt Solution Explained


Summary Result (Once Accepted)

· Reduced unsecured debt repayments from $1772p/m to $1,150 p/m (a reduction of $622 p/m)

· In 3 years, he will be debt free

· The credit file listing will be removed in 5 years

· Avoids legal action by Creditors

· Interest on debt is frozen

· Fees are largely absorbed by contributions to Creditors

· Harrison is greatly relieved to have a manageable debt solution.  He has avoided Bankruptcy and the Collections calls and harassment have stopped.