“This is to say a BIG thank you for your help in successfully guiding me into a debt agreement. I am now managing my money in a much healthier way and even managing to save a little each pay. Much appreciation to all at Debt Cutters.’
-- Jenni Chiltern, VIC

Please note that all of the case studies written below by the Courier Mail are Debt Cutter clients.

DIANNE, a single mother of two, working part time, never had a lot of money but was always able to make ends meet.

That suddenly changed four years ago, when her daughter started school and suffered a serious ear infection. Doctors told Dianne her daughter need an operation to fit grommets in her ears.

“She had lost 40 per cent of her hearing. There was a three-year waiting list and if we waited that long, she would need more serious surgery,” Dianne, 43, said.

She started taking in ironing to try to raise the $2500 for a private operation and when that didn’t work, made a series of fruitless applications for bank loans.

“One day I had been at the bank crying to the manager, who said no, and I got home to find a letter from the same bank saying I was a wonderful customer and would I like to double my credit card limit from $2000 to $4000. I was like 'yes!”

Two more operations were needed. “It’s like the banks were psychic. Each time within a week of finding out she needed another operation, we got a letter increasing the limit or offering new credit,” Dianne said.

“Faced with taking out the credit or letting your daughter go deaf, who wouldn’t take the credit?”

But meeting the repayments became harder and harder as over a four-year period Dianne’s debt on three credit cards and a personal loan climbed to $20,000 and she had fallen into the common trap of using one card to meet repayments on another.

“Every month it was just getting worse. It was the interest and over-limit fees which really did it. All my money was going on the monthly card repayments. I would get ill knowing it was getting close to the time when the bills would be coming.”

Three months ago, she responded to an ad from Brisbane-based Debt Cutter, a debt consolidation company, which negotiated a Part IX Debt Agreement with her creditors which will see her paying $220 a fortnight over the next four years.

Dianne says it was a more attractive option than bankruptcy because “this way you keep your self-respect”.

“It’s still a struggle but it’s a known struggle – there’s no shock when you open the bill,” said Dianne, who lives at Airlie Beach with her son, 10 and daughter, 8.

“We have to watch everything we spend… but there’s a light. You know it’s going to come to an end.”

Case #2:

CATHY and husband Peter were a working couple in their 50s when things turned bad two years ago.

“I was in two awful car accidents 18 months apart and because I had a pre-existing condition, there was no insurance payment. There were just medical bills for 18 months,” Cathy says.

“I earned a lot of money but we suddenly found ourselves on one wage.”

Then came additional costs associated with relocating from Victoria to the Gold Coast after Cathy’s doctor strongly advised a warmer climate would be better for her health.

The couple had an excellent credit rating and took up the offer of a couple of pre-approved credit cards to tide them over while Peter found work.

“You tell yourself you won’t use it until you really need to. It’s a very gradual thing – it creeps up on you,” Cathy said.

Within a couple of years, they had a total of $30,000 on four credit cards and $18,000 in personal loans. When they had to raise another $7000 loan “that killed us”.

For a period, the couple lived on toast and cornflakes. But try as they might, they could not keep up with the growing debt.

“I just knew it was beyond us to make it stop. It was a new situation for us in our 50s.”

Cathy says they felt frightened, isolated – and very embarrassed. It was not something they wanted to talk to family and friends about.

“I was almost suicidal and very sick. I was completely unable to think. All I wanted was for the phone calls and bills to stop.

“When it becomes obvious a debt is not going to be settled, they sell it on to someone else. These people are ruthless. These are quite big companies and they just won’t leave you alone.

“The phone doesn’t stop ringing. They say they might have to send someone around.”

Cathy and Peter have also entered a Part IX Debt Agreement and say it has restored their peace of mind.

Cathy says they know it could affect their ability to obtain finance for years into the future but “who the hell wants any more credit after going through this?”

Case #3:

ERROL, 24, went to Britain in February last year when his grandfather became sick.

“I couldn’t get more than four weeks’ leave and I ended up being there for a year. There was no one to look after him and I was trying to help out.”

Unable to obtain employment without a work visa, Errol began drawing cash on the five credit cards he had, just to make ends meet. By the time he returned to Australia this year and got a new job with Telstra, his debt had ballooned to $62,000.

Errol says he knows he is responsible for letting things spiral out of control but says the credit companies have to take some of the blame.

“It’s too easy. They would pre-fill the cards for you. I’ve had at least three cards since I was 17 or 18.” Errol says that when he got back from Britain, he tried to negotiate a repayment deal with his creditors. “But their demands were obscene. My whole salary would have gone to them.”

A debt consolidation agreement now sees him paying $270 a week from his $780 wages.

“It’s good to get rid of the headaches. It’s been a learning curve.”

Case #4:

PHYLLIS ended up $46,000 in debt and lost her home after her marriage broke up last year, leaving her unable to keep up the mortgage and credit card repayments.

Her estranged husband quit his job after the separation, leaving her trying to cope with two children, now aged eight and nine.

“It was so hard trying to explain to two little kids how they had gone from this nice lifestyle to going to welfare and getting food handouts,” says Phyllis, 37.

Things went from bad to worse when her former husband committed suicide a few months later.

The finance company was chasing me over the debt on his car. “I rang them to tell them he was dead and they said ‘we still want our money’.

“They came and towed the car away and then sent me a bill for between $500 and $600 for that.”

After a successful battle to access her husband’s superannuation, which he had signed over to his sister shortly before his death, Phyllis was able to clear her debts with about $17,000 left over.

“So I’m debt-free now but my husband had to die for that to happen.

“I tell people to be grateful for what they have. I had it all and lost it.”