Freeing Australians from the tyranny of unserviceable debts
Published 5:57 am 9 Dec 2020
Over the past decade, the DG Institute has helped thousands of Australians struggling with debt to regain control of their lives – and to rebuild their self-esteem. Founder and CEO Dominique Grubisa explains her passion for helping others fight debt stems from her own personal experience of going broke.
Like many Australians, Francis, a father of two, dreamed of building wealth for his family by buying an investment property.
Sadly for the young dad, the property he chose to invest in was in a mining town. When the heat went out of the resources sector, the value of the property plunged to hundreds of thousands of dollars less than the purchase price. To make matters worse, the rental income Francis was receiving didn’t cover the payments on this interest-only loan. When his bank demanded he begin paying off the capital on the loan as well, he realised he was facing bankruptcy, a forced sale, and a ruined credit record.
While Googling alternatives to bankruptcy, Francis came across the DG Institute’s Debt Management program, which specialises in helping people with toxic debt. He made contact and began working with the debt management team to develop a strategy to address his issues. The first step was to sell the property, effectively stopping the bank from selling it from underneath him. While Francis still owed the bank $225,000 after the sale, the DG Institute team were able to negotiate to have this figure reduced to just $40,000, a sum he was eventually able to pay off. Francis is now debt-free and has an intact credit record – a stark contrast to what would have happened, had he carried this debt for the rest of his life or, perhaps worse sell, declared bankruptcy.
“[The debt team’s solution] has just taken a mountain off my shoulders,” he says. “I’ve got a second chance and I can look after my family a lot better. I can look to the future rather than looking at how I’m going to make ends meet.”
Financial hardship on the rise
Francis is far from alone in having trouble with debt. Australians have such a love affair with borrowing money and living beyond our means that our level of household indebtedness is one of the highest in the world. Only households in Denmark, the Netherlands and Macau have a higher debt ratio, according to recent research.
Add to the equation, the impacts of COVID-19, including hundreds of thousands of job losses and a recession, and you have the ingredients for major debt problems across the country. Figures released by consultancy Digital Finance Analytics show the number of households suffering from mortgage stress – having trouble making mortgage repayments – rose from 32.9 percent in February to an alarming 41.6 percent in November. That’s a jump of nearly 10 percent in less than a year.
Things are expected to become much worse in the new year when the scaling back of protections for company directors and the JobKeeper scheme is expected to result in a surge of insolvencies. During the September quarter of 2020, the number of bankruptcies in Australia actually fell to its lowest levels since records began, as government payments and concessions kept so-called zombie businesses afloat. As a result, we can expect to see thousands of businesses failing in the early part of 2021 and an enormous number of people in debt.
Lessons learned from debt crisis
DG Institute first began helping people to navigate their way out of debt more than a decade ago during the global financial crisis, and we expect to be very busy helping people in the post-COVID period. While the debt division is now one of the most high-profile arms of the DG Institute’s business, alongside our Real Estate Rescue and Master Wealth Control arms, not everyone knows it grew from my own personal experiences. In fact, my own difficulties with debt are the very reason the Institute exists.
In the early 2000s, I was a successful barrister and, along with my husband Kevin, I owned a string of investment properties. Things were going wonderfully until an unexpected legal wrangle put a stranglehold on my cash flow. Because I was unable to service my debts, my investments came crashing down like a house of cards, with creditors demanding millions in payments. I sailed dangerously close to bankruptcy, but through negotiation, sheer will power and persistence, I was eventually able to reduce and then eliminate my debt and rebuild my life.
The experience inspired me to share with others what I had learned about negotiating away debt. This became a business with a handful of clients who needed help and has grown over the past 11 years to the point where my team has helped thousands of Australians to find their feet again.
A personalised approach to debt management
When the DGI Debt Management team starts working with a client, our initial focus is to create breathing space by stopping the harassment from debt collectors and creditors. Next, we will assess the client’s current financial situation and reverse engineer an exit strategy with them. We will investigate to see if there have been fraudulent practices or maladministration on the behalf of the creditors – something that could invalidate or offer us leverage in reducing the debt. We will then negotiate with creditors to either settle debts for a lesser amount (cents on the dollar) or to have them written off entirely. Finally, we help clients create personalised debt management plans to move ahead and restart their lives.
Hearing the success stories of people whose lives we have helped turn around makes it all worthwhile.
Take the case of business owners Warren and Prue. Struggling with cash flow, they approached the DG Institute debt team to find ways of reducing their monthly outgoings to help stay afloat. Through negotiation, the team was able to convince a lender to fully write-off a debt of almost $39,000, reducing their monthly outgoings by $200 and putting them in a better position to trade their way to a better future. “The lender’s first offer was to just completely write off the debt, which was a very surprising outcome and one which we jumped on straight away,” says Warren. “That’s been a huge benefit to us and helped us immensely.”
Then there’s the case of Patrick, whose health problems contributed to him and his wife accumulating $177,500 in debt. With help from DGI, the debt was reduced to just $8000 – a staggering 93 percent decrease. For another client David, the percentage reduction was even greater. With help from the debt team a $45,000 debt was reduced to just $2300 – a 95 percent reduction.
If You’re in Debt
Being in debt places you into a precarious financial situation which can quickly snowball into a catastrophe.
One of the clients at DGI Debt Management was a business owner and the primary provider for his family, when the pandemic hit and dramatically reduced his income. In order to continue paying his bills and putting food on the table, he began to take on more debt than he could afford and quickly found himself with $20,642 in debt.
The Debt Management team was able to reduce his debt down to just $3,759, cutting 82% of his total debt off and giving him the breathing room he needed to get back on his feet.
On top of that, he no longer had to worry about the possibility of bankruptcy, or having to deal with creditors anymore.
To find out if the Debt Management team can improve your debt situation, visit DGI Debt Management today.
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