Susan’s Story
Susan*, a 70-year-old whose only income is the Aged Pension and sole asset is her car, has taken out around 20 payday loans since 2013. She explained that once one loan is repaid, she immediately takes out another, often going without food just to meet the repayments. When Susan first reached out to the National Debt Helpline, she shared that her health was poor and her cupboards were empty. She typically borrowed small amounts, ranging from $50 to $100, but over time, Susan had repaid more than $9,000 to the payday lender. The strain of these repayments, along with other debts, left her unable to afford basic necessities like rent, utilities, and food. We believe the payday lender may have breached its responsible lending obligations. Although Susan was initially hesitant to file a complaint, knowing some of the staff at the lender, she successfully resolved the dispute with the help of legal advice.
This case study is from the Consumer Action Law Centre’s payday lending report.
Sarah’s Story
Sarah*, a 43-year-old woman, moved to Australia with her child and now ex-husband. Not long after, she was forced to flee her home due to family violence, leaving with only a few dollars in her pocket. With nowhere to go, Sarah became effectively homeless for several months, relying on couch surfing, staying in refuges, and using expensive short-term accommodations. Eventually, she secured full-time employment and began searching for a more permanent housing solution. However, due to her financial situation, Sarah took out six loans over five months to cover bond and rent payments for rental properties, including four Small Amount Credit Contracts (SACCs). By the time she took out the fourth SACC, she was already behind on repayments for the other three SACCs and two additional loans, along with buy-now-pay-later debts. While the fourth SACC provider noted that the loan was intended to cover rental bond and the first month’s rent, they failed to account for accommodation costs when assessing the loan.
This case study is from the Consumer Action Law Centre’s payday lending report.
Charlie’s Story
Charlie*, an Aboriginal woman in her mid-20s, lives in a regional area. About five years ago, at just under 20 years old, Charlie began a business traineeship, earning a little over $450 per week. During this time, she was facing immense personal hardship—her father had recently passed away, and she tragically gave birth to a stillborn baby. To cover the cremation costs for her child, Charlie took out a payday loan of just under $650.
Amidst the grief and stress, Charlie’s mental health deteriorated, and she became unable to continue working, leading to significant financial difficulties. Her only source of income was the Centrelink pension, which she needed for rent, groceries, and caring for her young child. Unable to keep up with her payday loan repayments, Charlie quickly fell behind.
The loan, originally for just under $650, came with additional charges: an upfront establishment fee of nearly $130, monthly fees, and dishonour fees of around $35 each time she missed a payment due to insufficient funds in her account. These fees accumulated, and despite Charlie’s efforts, she now owes far more than she initially borrowed.
Struggling with her finances for years, Charlie turned to other forms of unregulated credit to cover basic living expenses. She took out another payday loan and used buy-now-pay-later services, but after making only one payment, she fell into arrears, leading to calls from debt collectors.
In addition to the loss of her baby and father, Charlie also lost her mother in recent years. As the next of kin for both parents, her financial priority became covering their funeral costs, leaving her with little to address her other debts. By 2019, Charlie was incarcerated, cutting off her income entirely and leaving her with no means to repay her mounting debts, trapping her in a cycle of financial distress.
This case study is from the Consumer Action Law Centre’s payday lending report.
Lola’s quick cash loan
Lola has a close friend’s birthday coming up and needs both a gift and a new outfit, but her payday is still two weeks away. She hears about a cash lending company that offers quick approval with minimal paperwork, and same-day payouts. Lola applies online, is easily approved, and sets up her repayments over 8 weeks (4 instalments), which seem affordable at the time. She doesn’t pay much attention to the fees, as she urgently needs the money, but later realizes that borrowing $350 will actually cost her $693.60! In the following weeks, unexpected expenses start to pile up—phone credit, Netflix and Spotify payments, and the upfront cost for a new work uniform, which won’t be reimbursed for another month. Lola begins receiving letters from the lender about additional fees, but she ignores them, knowing she can’t afford to pay and that no one in her family or circle of friends can help. Before long, her debt has ballooned to over $1,000.
Case study sourced from Good Shepherd web site
https://goodshep.org.au/wp-content/uploads/2020/12/Case-study_payday-loan_youth.docx
Case Study 1
Over the past year, John, a pensioner living alone in a home he has owned for 20 years, submitted an application for a NILS loan. He had previously used NILS loans regularly to maintain his car, covering costs such as registration and repairs. However, when his gas hot water system needed replacing last year, he found no room in his budget to afford the plumbing work. After going without hot water for more than six months, including during winter, John reached out for assistance. By coordinating with the original plumber and combining a Centrelink advance with a NILS top-up loan, we successfully replaced the hot water system. Repayments were arranged to ensure John could comfortably manage both the Centrelink advance and the NILS loan without facing further financial strain.
Adapted from a NILS case study from highlands community centre.
Leanne’s Success Story
Leanne*, a single woman in her fifties, recently became the sole carer of her three grandchildren after her adult daughter, who struggles with drug and alcohol issues, lost custody for child protection reasons. Leanne’s small home wasn’t equipped to accommodate the children, and she needed a double bunk and a single bed. Previously employed at a local supermarket, Leanne had to quit her job to care for the youngest grandchild, who is not yet in school. With limited savings and now relying solely on a Centrelink income, she was worried about spending her savings on the beds, fearing she might need the money for an emergency.
Leanne reached out to a local community organization and was referred to Emergency Relief to help cover some unexpected living costs. She also inquired about getting beds and was directed to the NILS program offered by a larger organization in town. Leanne, being well-organized, came prepared with all the necessary paperwork and multiple quotes for the beds. During the application process, she found the budgeting conversation particularly helpful, as she had been struggling to manage the household expenses.
Although there didn’t seem to be room in her budget for NILS loan repayments, the worker noticed that Leanne wasn’t receiving all the benefits she was entitled to. She was referred to Centrelink, and once her benefits were adjusted, her increased income allowed her loan to be approved. Leanne was relieved to be able to purchase the beds for her grandchildren while keeping her savings intact for emergencies. The budgeting process gave her a sense of control, and she now feels confident that her family will be able to manage moving forward.
https://goodshep.org.au/wp-content/uploads/2020/12/Life-changing-loans-at-no-interest.pdf
How a Financial Counsellor can assist - Case Studies
A very distraught client attended an appointment and said he needed to file for bankruptcy immediately because of his payday loans.
The Financial Counsellor (FC) informed him that there might be alternatives to bankruptcy and invited him to discuss his issues. Eventually the client agreed to talk about the situation but was adamant he wanted to go bankrupt or he “couldn’t go on”.
The client had been on Disability Support Pension for a long time. He suffered from schizophrenia and a learning disability.
The client said that he had managed to secure several pay day loans from various companies including Cigno, Lazer Money, Money3, City finance and Cash Converters. He owed several thousand dollars to them and the debt is increasing dramatically by the day because of the excessive fees and charges. He said most of the payments were being directly debited and he could not live on what was left. He was being hounded for payment when he missed any.
The client was advised that some of the loans might be able to be challenged but the client said he didn’t care as he couldn’t deal with the stress anymore and just wanted it to go away.
The FC assisted the client through the process and he was soon declared bankrupt. The client later thanked the FC and advised that he was pleased with the outcome.
A client attended the service seeking assistance with her two pay day loans that she took out to pay for some of the costs of moving house to escape family violence.
The client has two young children. She was starting to miss out on paying her utility bills and rent in order to keep up with paying the pay day loans.
After a lengthy discussion with the Financial Counsellor (FC), a Statement of Financial Position was prepared with the client and the client cancelled the direct debit authorities and opened a new bank account. She informed Centrelink about her new account details and instructed the FC to negotiate an affordable payments arrangement by instalments with the Pay Day Lenders. The negotiation was successful and the client was to only pay the principals of the debts without any fees and charges.
Vanessa is a 31-year old divorced mother with a special needs child. She escaped domestic violence and was in danger of homelessness due to rent arrears. Vanessa had many debts resulting from the abusive relationship including rent arrears from a previous tenancy, debts to two state government housing departments, debts related to traffic fines and parking, a Centrelink debt and a payday loan. Vanessa also had debts with three separate debt collectors, both her former and current electricity providers, her bank, and her mobile telephone service.
A financial counsellor advocated on Vanessa’s behalf with the various creditors to obtain reduced hardship payment plans, get partial and full waivers on some debts, assisted Vanessa to access her superannuation funds early due to financial hardship and empowered Vanessa to take better control of her budget expenditure.
Vanessa avoided bankruptcy as a result of her financial counselling and is in a better state to be able to seek part-time employment, pay down her remaining debts, and obtain some stability for herself and her children.
Case study taken from Financial Counselling – It makes a difference. For more information, click here: Financial Counselling Australia
Derek was living in shared house but was not listed on the lease. He left his job following the death of a family member. Derek was not able to keep up with his share of the rent and was asked to leave the property. He took out payday loans to pay the rent so that he would not become homeless.
Derek managed to find work but on a lower income. He cannot afford the regular repayments to his debts including two payday loans, a computer lease, credit card and traffic fines which resulted in a suspended licence preventing him from better paid employment.
Derek became very stressed about his financial situation and was receiving calls from creditors most days asking for repayments at a rate he could not afford. His stress was further exacerbated by the possibility of again becoming homeless given his limited capacity to meet his share of the rent.
A financial counsellors discussed with Derek ways of decreasing expenses in order for his income and expenditure to balance. With Derek’s permission the financial counsellor negotiated reduced repayment arrangements with all of Derek’s creditors, assisted Derek to apply for a repayment plan to keep his driver’s license and encouraged Derek to go to the doctor to discuss his mental health issues. Negotiations with creditors are ongoing. Several have accepted the repayment arrangement that was offered. Derek has had his licence reinstated. This has assisted him to gain a job on a higher income. He is now meeting his loan commitment.
Case study taken from Financial Counselling – It makes a difference. For more information click here: Financial Counselling Australia