Debt and more debt (Debt Relief)

Wendy, a Financial Mentor, met Peter, a superannuitant, in 2014. Peter accessed food parcels, and received help to visit Work and Income due to his high hardship count. His high needs also meant that the Budgeting Service was able to access Work and Income funding to pay for an ambulance call out when he became ill, and to pay for his car repairs and registration. However, Peter’s overarching difficulty was a $15,000 debt with a bank. The FM helped Peter reduce the regular repayments at the bank, although she felt uncomfortable doing this, knowing the increased interest that would be incurred and ultimately have to be paid to the bank.

As Peter had been employed in reasonably good paying jobs during his working life, it was difficult to understand how he had ended up in retirement with a large debt, living in a Housing NZ (HNZ) house, with no assets. The FM put good monetary practices into place as she continued to work alongside Peter. It took a long time as there was so much in arrears. Power bills, the car loan, HNZ and other creditors were slowly pulled back into the black. It led the BA to think ‘It is really expensive being poor.’ She became very aware of the poverty burden of late payment penalties and loss of ‘prompt payments’ incurred as Peter tried to move forward. Wendy persevered as she could see Peter did not want to take on any more debt. Bankruptcy took away the large debt, and she helped with sorting his insurance policies. She applied for a Ngā Tāngata Microfinance debt relief loan for Peter to eliminate the last debt, a car loan. The debt relief loan charges no interest, and thereby Peter would pay this debt off a lot sooner.

Wendy says that together with the financial assistance coming from the budgeting agency itself, the food parcels also pitched in to play an important part in solving the situation.

The FM is very pleased now to see that Peter looks so much better. He has peace of mind because he can reinstate his modest life insurance policy and leave some money for his children. Where previously he paid someone mow his lawns and this was covered by a disability allowance, he is now mowing his own lawns. His rent is 2 weeks in advance, his electricity is in credit going into winter, he is nearing finishing paying back money owed for a car accident, he is saving for his next car registration, he is able to take family members to outings, and he has an AP to doctors and chemist for ongoing medical needs. He has regained financial control, and that has increased his well-being.

Note: all names including those of the loan companies have been changed. Any re-publishing of these case studies need the permission of Ngā Tāngata Microfinance Ltd.

Peter’s new budget

Incomeper fortnight
NZ Super plus$749
Disability Allowance$14.30
Family Tax Credit$220
$983
Expenditure & Debtper fortnight
Groceries$250
HNZ$224
Power$80
Phone/internet$28
Accident payment$20
Medical$10
School$20
Other costs$15
Clothing$20
Life Insurance$22.50
Petrol$60
Rego/WoF$20
Car Insurance$20
Ngā Tāngata$90
$880

There is $100 surplus in the budget now.