How to turn a financial hardship situation into a financial success

Background

A client of AAG’s had experienced the misfortune of being made redundant and many months later was still unable to find a new job.

During this time, and with little to no financial buffer to protect them, our client was forced to take out numerous credit cards to fund their day-to-day expenses. With debts mounting and no income to meet payments, including repayments towards their home loan, it became evident our client was in a situation that was spiralling out of control.

Adding to our client’s stress was the way in which they had financed their home purchase. They had received financial help from their parents in order to buy the property, and as part of this arrangement the parents had also provided their owner-occupied property as security via a guarantee to the bank. Consequently, as our client was not making their monthly repayments on their home loan, the bank threatened mortgagee action on both the client’s house and their parents’. The reality of the situation was that the bank now had recourse to the parents’ property.

With their financial hardship taking its toll on both them and their family, our client came to AAG for urgent help.

AAG In Action

After meeting with our client, the overriding task was to help them get back in good standing with their financial institutions as quickly as possible. This involved a full review of their overall financial position and cash flow – the most urgent priority being their parents’ house and ensuring it would not be sold by the bank.

We reviewed the cash flows for both our client and their parents and implemented a number of immediate strategies to ensure there was sufficient monies to make payments for the arrears on each loan. These strategies included:

• Renting out the client’s property to generate cash flow;
• Establishing a new bank account in the name of the client to be managed by AAG; and
• Liaising with the ATO to vary the PAYG withholding to assist with cash flow.

Once the above was in place, AAG negotiated with the bank to establish an achievable and sustainable repayment arrangement for the home loan and took on the client’s monthly cash flow management to ensure compliance with the arrangement.

The next step after clearing the arrears and getting the home loan back to good standing was to approach the remaining creditors for our client’s credit card debts and establish repayment arrangements. AAG was successfully able to manage this.

Finally, we arranged to refinance the client’s home loan to another lender to release their parents’ guarantee and property as security, ensuring the parents would not be in such a risky position again.

Result

Our client was very grateful for the support and guidance they received from AAG. As a result of engaging our team to assist them we were able to:

• Ensure neither the client’s or their parents’ homes were sold by the bank;
• Arrange payment for all outstanding liabilities belonging to our client;
• Refinance our client’s loans from their existing bank and release the parents’ security guarantee; and
• Help our client achieve a financially sustainable position with future investment strategies currently in planning.

If you are experiencing a challenging financial situation and require urgent assistance, or have any questions about this matter, please contact the AAG team today on (08) 9227 6300 or email clientservices@austasiagroup.com. We are here to help you!