The $32,000 Couch

Question


Hi Scott,

Ten years ago I got a ‘buy now, pay later’ $4,000 ‘living room package’ at a retailer (couch, TV, coffee table). Actually, the deal was that they gave me a GEM Visa with a $6,000 limit … so another $2,000 credit, which I stupidly spent. Fast forward 10 years and I am still struggling to pay it back. I am a single mother with a chronic illness, and while I really want to work I just haven’t been able to. Yet so far I have paid back $32,000. Last year, while I was in hospital, my debt was sold to another group, Lion Finance. They arranged a $10-a-week payment plan, but my debt has increased by $1,000 in the last year. I need your help!

Lisa

Scott's Answer


Hi Lisa,

Your email makes me sad, and incredibly mad. (So today I’m going to be a little bad.)

What a bunch of … bankers.

The business model of these institutions is basically to take advantage of people like you who don’t understand the complex contracts they’ve signed up to.

Yet you have acted honourably: you made a 15-minute mistake and have steadfastly paid a huge price for 10 years because of it.

Now you’re probably thinking to yourself, “Well, I’m just a single mum on a disability benefit, there’s nothing I can do … these finance guys have the upper hand”.

No, they don’t.

You have the upper hand.

Together, we’re going to get this debt wiped — to zero.

Don’t get me wrong. Generally, I’m in favour of people paying back their debts, but you’re in a special situation:

First, you’ve repaid the principal plus more than your fair share of interest over the past decade.

Second, the Lion Finance deal is disgusting: you’re repaying $520 a year, yet your debt rises by $1,000! On a Centrelink income, you’ll never, ever, clear it. They’ve effectively trapped you for the rest of your life.

And, finally, what are they going to do if you stop paying?

Well, they’ll probably huff, and puff, and threaten to blow your house down. But the truth is they can’t do anything: you don’t have any capacity to repay the debt, and you have no assets.

So this week I want you to call the National Debt Helpline on 1800 007 007 and ask to speak to a financial counsellor. Tell them your story, email them the paperwork, and request a debt waiver.

Time to stand up to the bullies.

Scott