‘Shame’: Moment 31yo almost went bankrupt
A young Aussie has revealed the moment she realised she might have to declare bankruptcy after an embarrassing mistake.
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When Krista was still a teenager, she secured her first loan, and by her mid-twenties, she was in over $70,000 worth of debt.
Krista was 18 years old when she walked into a bank and secured an $11,000 loan. She was working part-time at Coles and was just excited about the idea of feeling rich.
“I wasn’t sure what interest was or how it worked,” she told news.com.au.
Once she got a personal loan, she was offered a $5,000 credit card and quickly maxed out both the loan and credit.
“I’m so embarrassed. I just thought the money would grow back every month,” she admitted.
It didn’t.
“I maxed out the credit card within two weeks. I thought it was so cool! I’d go out partying and withdraw cash,” she explained.
“I didn’t realise you’d also get a fee if you withdrew cash.”
In retrospect, Krista, 31, described her behaviour as “wild,” but she was young and naive at the time.
She still remembers the moment she received the first letter reminding her that she needed to make her minimum repayments, and she was shocked.
“I was like wait a second? And then I just ignored it. I think the minimum was like $218 and I didn’t have it,” she said.
The payment reminders kept coming, and Krista wasn’t making enough to cover the repayments.
“I started to freak out,” she explained.
At the time, the only way she thought she’d be able to get on top of the debt was to get another credit to pay off her current credit card.
Krista found herself in a cycle of accruing debt and then securing another card or loan to pay off that debt, but she always ended up in more debt.
“It ended up spiralling,” she said.
The 31-year-old just couldn’t manage her debt. By this point, she was in her early twenties, making less than $55,000 per year, and completely out of her financial depth.
Krista said that there’s so much “shame” around debt that she didn’t tell her family or friends that she was struggling.
She kept going until she couldn’t afford the loan repayments, and eventually, she tried to ignore the debt.
“I was really struggling. I didn’t ask for help and I just stopped paying,” she said.
“I changed my phone number four times in two years. I was just getting relentless phone calls from debt collectors.”
By that point, though, dealing with the debt had just become too big and overwhelming. It had gone from an $11,000 original loan to a $70,000 debt.
It got to the point where she was “scared” and anxious and she said the whole thing was “messing” with her head.
She wanted to pay the debt, but if she started paying it, she wouldn’t be able to pay for rent or food.
Eventually, it all caught up with her, and a debt collector contacted her through her general work email, and she had to explain to her boss what was happening.
Krista said her instinct was to delete the email but she realised it was time to be “responsible” and deal with it.
“I was in a lot of trouble,” she said.
Krista started facing the debt, though, even though it terrified her. It wasn’t easy; at first, she couldn’t afford the debt and pay the rent.
“I wasn’t able to pay my rent. I got evicted,” she said.
“I was so stressed. I was going to go bankrupt but I realised that the process of bankruptcy was so long and drawn out,” she said.
Instead, Krista wrote to the debt collectors in hopes of reaching an agreement with them that would allow her to pay back her debts and afford to live.
“I couldn’t afford the garnishing. I’d have been on the streets.”
Two months later, the agency replied, and they reached a fair repayment plan. Facing her debt has been a huge relief for Krista.
Within two years and with so much hard work, she’s managed to reduce the debt to $2,000.
“I feel lighter and happier. I was so stressed,” she said.
Financial Comparison Finder has revealed that millions of Australians are struggling under the weight of their debt.
The Finder data shows 23 percent of Aussies have a credit card balance accruing interest and nearly one in seven Aussies has a personal loan.
The average personal loan balance is $7,678, or a whopping $22.5 billion Australia-wide. The survey found that 14 percent of Australians have a car loan, with an average balance of $12,346.
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