I’m sitting opposite a financial counsellor who’s just gone through my finances with a fine-tooth comb and they are telling me that this apparently is my best option. I know they’re right. The debt that is swallowing me whole, and has been for years now, is unmanageable – not for a lack of trying on my behalf.
I’m 40 years old, and from the outside I probably seem successful. And in some regards I am – so long as we don’t talk about my finances. I am just under $100,000 in debt. There is nothing successful about that.
How did I get here? I got my first credit card 10 years ago – the first mistake in a long line of them. I always had a compulsive need for things – not that I knew that at the time. Shoes, clothes, technology, and travel were mostly what I spent my money on.
Honestly, when I was younger, I was materialistic, I thought that having nice things equated to something more significant. I thought that it reflected something positive about me to the people I was around.
Growing up my parents instilled a strong work ethic in me but unfortunately they never really taught me about budgeting or how to manage money and credit cards.
Stupidly, I never got the concept that these weren’t really credit cards; they were debt cards.
When I needed a car, I got my first personal loan. Next came a second credit card, then a third, and I wasn’t managing them well. I didn’t know how.
Stupidly, I never got the concept that these weren’t really credit cards; they were debt cards. And banks kept on giving them to me. I’d pay off a credit card and then call the company to close that account, but this was never as easy as it should have been. They’d juggle me from department to department and stall the closing of the account until a few weeks later, when a new card would arrive in the mail. And then I would use it again.
This became a cycle: getting into more debt to pay off other debt. Then I got another loan to cover the credit cards, and it was really starting to steamroll into something monstrous. I went to my bank to try and get help – or at the very least some advice - as to how I could be managing this better. They just offered me another credit card.
At its worst, the weight of this debt was inescapable. It was in the back of my mind all the time, and as it got bigger and less manageable I had a constant feeling of horrible, sickening dread. There was no light at the end of the tunnel. I couldn’t save for holidays or a house – any big-ticket life experiences that had money attached to them were things I was unable to consider. All my money was going into paying off these debts.
The shame I felt around this situation was as bad as the debt itself, if not worse. I tried calling different debt help companies, but they take a fee to help you. More money that I didn’t have. I called the credit companies and made hardship agreements with them, but I knew these were just band aids, stalling the inevitable.
After about three years of juggling payments I was getting nowhere. I called the National Debt Helpline, and after three phone calls, finally managed to make an appointment to see someone face to face. I had to wait three weeks. This is where I was told that I could keep funnelling all of my money into these debts for the rest of my life, but I would never get out from under it. The only other option that was given to me shocked me – voluntary bankruptcy.
I found it easier to tell my family I was gay than to tell them how much debt I was in.
That word was very jarring, and not at all easy to hear, but when I was told the facts about what it entails I realised that I was being given a second chance. A second chance with consequences, but a second chance nonetheless.
In a nutshell when you are apply for voluntary bankruptcy, a trustee is appointed by the Australian Financial Security Authority (AFSA) who manages your financial affairs. For the next five years it will appear on your credit report that you are bankrupt. You also get placed on a public record for life known as the National Personal Insolvency Index. You can lose assets like your house, car, jewellery, art, antiques and more. You can't be the director of a company and if you earn over $54,736.50 after tax, you have to pay 50 cents to the dollar up to what you earn (although that threshold is different if you have kids). If you want to travel overseas you have to pay a fee and get permission from the trustee to do so.
It’s not for everybody but I am in an ideal position: I don’t have a family, I don’t own a business, and I don’t own my own home.
The main things I have had to grapple with have been my own feelings of shame around this, and the stigma surrounding debt. Nobody talks about debt. It’s a dirty word. I found it easier to tell my family I was gay than to tell them how much debt I was in.
I really believe that there needs to be more education and discussion around personal finances and budgeting at school. I have to say, the Pythagorean theorem and learning the recorder didn’t help me later in life when I was struggling with money.
Not everyone gets taught about money by their family, there needs to be more education at the school level around what having a credit/debt card really means and what the consequences are of credit.
At a banking level, things really need to change. The business model used by banks is one designed to take our money. Once you’re in debt, they want to keep you that way. More funding and support needs to be invested into helping people that are in financial strife. I can only hope that the banking royal commission will bring about the change that is so desperately needed.
Bankruptcy was by no means an easy decision for me, but it was the right one. I was being swallowed whole by something I couldn’t manage myself – something that was actually impossible to get out of. Declaring bankruptcy isn’t conventional, but it’s given me my future back.
Insight wants to know what it’s really like for you at work. Do you work in a job that the public misunderstands? Is there something about your work that makes you want to blow the whistle? You can remain anonymous if you wish. Send an email to mystory@sbs.com.au
