Section 2: Case study 2 Richard and Pauline Jackson

Background

Richard and Pauline Jackson have a small mowing and gardening business in which they have been working for the last eightyears. As it is only the two of them in the business they operate as a partnership.

They have approached you to help restructure their finance, as they are finding the management of their debts a struggle following the loss of one of their major commercial property contracts.

After further questioning, you realise that the situation is more serious than they originally explained; theyhad missed payments on their mortgage, only pay the minimum on their credit card of 3% each month and the work ute they have on lease is expiring. They have a $15,000 residual payment due and do not have the funds available.

They lost the major contract 12 months ago and fell behind on the mortgage payments soon after. Theyspoke to their lender (First and Last Bank) and a 'hardship application' was approved. The missed payments were corrected by extending the term of their loan. Nothing adverse was recorded on their credit file but they are still struggling with all the monthly commitments.

After reading the case study above and reviewing their funding position below, answer the questions that follow:

Assets

46 Walters Road, Ritchfield

$490,000

First and Last Bank savings account (joint)

$1,200

Little Saving Building Society cheque account (joint)

$2,300

Business debtors (unpaid invoices for work)

$6,200

Ford Utility, 3 years old (work vehicle)

$25,000

Holden Commodore, 7 years old (family car)

$15,000

Superannuation AMB Insurance (Richard)

$46,000

Superannuation AMB Insurance (Pauline)

$29,000

Household effects (insured value)

$66,000

Liabilities

Lender

Situation

Interest rate

Monthly repayment

Debt

First and Last Bank (home loan joint)

Currently up to date though had three-month extension to contract after hardship application 12months ago

5.7%

$1,567.00

$270,000

Big Bank Visa card (Richard)

Only able to repay 3% per month for last sixmonths

18.95%

(pays 3% per month)

$240.00

$7,800

(limit $8,000)

Little Bank Visa card (Pauline)

Only able to repay 3% per month for last sixmonths

Is over limit by $800

21.5%

(pays 3% per month)

$90.00

$3,800

(limit $3,000)

My Domain Furniture Store

Did not keep to interest free contract and paying debt by instalments

28.50%

$370.00

$3,400

Super Car Loan lease

Four-year contract expiring next month and need $15,000 to pay residual

n/a

$850.00

$15,000

(residual)

Total

$3,117.00

$300,000

1.What communication skills would you use to establish rapport and build a relationship with clients.

2. what service standards you should meet to provide a high level of service to clients. Includetimelines for returning client enquiries etc. in your response.

3.List two (2) questions that you would use to effectively communicate with the clients to confirm Richardand Pauline's understanding and knowledge about credit and finance.

List a further two (2) questions that you would ask to identify or confirm their current financial position, including establishing their requirements and objectives with the refinance?

Advise where you would record the client's responses.