We recently sued one of our debtors. Today we received a letter from an institution known as the Insolvency and Trustee Service Australia or the ITSA. It is the official trustee of banckruptcy. Someone in financial difficulty and facing insolvency or potential bankruptcy may go to this institution and ask to have a debt agreement proposal drawn up for him. The trustee would then draw up such an agreement and give it to all creditors for their consideration. The statement we received look like this (note all weekly basis):

 

Income
Basic pay after Medicare levy	$650.00
Centerlink (social security) benefits	$351.37
Maintenance received	$323.65
Total Income	$1325.65
Expenses
Rent/Mortgage	$200.00
Food	$230.00
Phone/Mobile Phone/Internet/Cable TV	$94.30
Electricity/Gas	$56.60
Medical/Chemist	$5.00
Car finance	$209.90
Car fuel/registration/insurance	$104.50
Other insurance	$13.75
School fee/expenses	$50.00
Other expenses for children (sport/ music/ presents/ clothes)	$165.00
Clothes/shoes/hairdressers	$10.00
Incidentals – entertainment/ alcohol/ cigarettes/ books/ takeaways/magazines)	$20.00
Total Expenses	$1159.05
Net Balance	$165.97

 

This is a pieced together family, with both partners coming from previous marriages and children from those marriages. The maintenance and social security benefit they receive exceed their wages/earnings. They have a total of 5 children. Is this a humane and decent society we live in or is it one which encourages irresponsible behaviour? Does this provide a safety net and especially ensure children do not fall by the side or does this spawn more fragmented families because there is always a safety net? I find this very intriguing. The authority gives them financial support and even allows room for matters like cable television, sports and music lessons, alcohol and tobacco. It recognises that ordinary families need these things to live ordinary lives, their near bankruptcy notwithstanding. Items Malaysians would consider luxury are taken as basic necessity and therefore allowed as reasonable expense items for someone who is insolvent or near bankrupt.

 

Take away the social security and maintenance payments. They would have $650 per week. Rent and food is about $430.00. That leaves $220.00 for other stuff. Assuming that electricity and gas are essentials, and assuming they trade in their car for something much cheaper and therefore eliminate the car financing and lower fuel costs, they might just squeeze through don’t you think? But they would have next to nothing apart from bare subsistence. In other words, the cushion is still very generous. I know this is good for the kids but I don’t know what it does to responsible behaviour on the part of parents.