Young Bankrupts

Reporter: David Richardson

Ray and Michelle Edmonds are caught up in a credit card spiral that is truly frightening. "Terrible, absolutely shocking. I hate living like this. I can't afford to live just day to day. I've got credit card companies ringing me up everyday asking me when are we going to get money, when are we going to get money. Sixty one thousand dollars between us yes."

"Just started with one credit card. Once we had the baby, things just got more and more expensive. Got another credit card to pay off debts and it just got out of control." And that's an understatement, here is what they owe. Ray owes $16,500 on his car, another $11,500 on one personal loan, $6,500 on a second personal loan. He also has one credit card, maxxed out.

Michelle owes almost $8,000 on a car loan for a car that's already been repossessed, one credit card is $5,800 in arrears, she has five other credit cards, two suspended for non payment. "Ray brings in about $1,200 a fortnight, I bring in about $800 a fortnight" said Michelle. Almost all goes to the credit bills.

If you were that badly in debt why did they give you more credit cards? "Yeh, exactly. But that's my fault for going and getting more. But they still should have said no" said Michelle. Unable to pay the bills, unable to buy food some days. Michelle is now considering declaring herself bankrupt, it's the only way they can survive. And that's with money coming in, a job.

A new survey has found one in five workers wouldn't survive a week if they lost their job, and fewer than one in twenty could avoid financial ruin for two weeks without work. Gerard Brody from the Consumer Action Law Centre is seeing younger and younger couples declaring themselves bankrupt, because it's too easy to get credit.

"I think it really is a common tale in regard to debt and young Australians. There are pros for consumers regarding bankruptcy. It does give them a fresh start. It wipes all their debts" said Gerard. But it leaves a black mark on your credit record, for seven years. One in ten bankruptcies involved people under 25, but the vast majority are people aged between 25 and 44, every second one. The over 45's being just 30%. "After 7 years is up, it's a new start. Seven years is the length of time it will take before the mark on their credit report is removed" said Gerard.

The Edmonds are trying desperately to hang on to their rented home, without it, they've got nowhere else to go. Bankruptcy Michelle's only solution. "I hate myself for it. Everyday. It's just our debt over our shoulders. It's horrible."

Consumer Action Law Centre

Tel: 03 9670 5088

Website: www.consumeraction.org.au