We were referred a client to help him settle a guarantee debt owed to a financier, which totalled just over $30,000. The guarantee our client had signed with the financier contained a charging clause and the financier had used this provision to lodge a caveat over our client’s property. A caveat is a type of security. The financier had then commenced legal action seeking among other matters, payment of $30,000 or possession of the property (plus interest and costs).

Background

While we are based in Brisbane, we are able to assist clients located all around Australia. In this instance, the client was based in a rural Queensland. As such, all consultations were done via telephone calls and emails.

During our initial meeting, we established the following:

  • Our client had separated from his wife and was sharing custody of their 8 year old son;
  • He jointly owned a property with his estranged wife which was valued at approximately $450,000. The property was subject to a mortgage with the Commonwealth Bank of Australia, with a payout amount of approximately $409,000;
  • The wife was seeking a divorce and payment of $35,000 on account of her interest in property;
  • The finance agreement / guarantee had a charging clause which granted security interest in personal property of our client to the financier;
  • The financier had lodged a caveat against our client’s interest in the property, separately registered its interest on the personal property securities register (PPSR) and was seeking judgment including an Order to sell the property; and
  • The client had no other significant assets apart from the property.

Options Available To Our Client

Based on our client’s circumstances, the options available to him were:

  • Bankruptcy, which would release them from their debts;
  • A proposal for a Debt Agreement pursuant to Part IX of the Bankruptcy Act 1966; or
  • Seek to settle the debt owed to the financier to avoid bankruptcy.

Often, when we are approached by clients facing financial difficulty, the aim is to assist clients in avoiding bankruptcy. While bankruptcy has its benefits, it is not for everyone and we only recommend this course as a last resort.

With that in mind, our client wanted to negotiate a settlement and we started negotiations with the financier on behalf of our client.

Successful Outcome

Having been appointed, we first approached the financier’s solicitors to inform them of our appointment. We also requested that all actions in relation to the court proceedings be put on hold while we formulate a settlement offer. This was essential so it would take the pressure off our client from having to deal with the proceedings.

We then set out the possible outcomes and returns to the financier’s solicitors in the event our client is pushed into bankruptcy. As registered liquidators and bankruptcy trustees, we are in a unique position to convince the financier that a settlement is a better option for all parties.

After some negotiations, the financier accepted a settlement amount of $15,000 to be paid by payments of $100. Not only did we manage to reduce our client’s debt to the financier by 50%, our client was also able to keep his property and avoid bankruptcy.

Contact Us For Assistance

If you have difficulty in keeping up with your mortgage or finance payments, speak to us and we can advise you on the options available. So, get in touch on 1300 906 966 or send us an email at mail@cactusconsulting.com.au to arrange a free confidential initial discussion.

Posted on 15-03-21 in Personal Debt Solutions, Personal Debts.