Drought-stricken Queensland graziers Deborah and Ken Smith thought they would be left with nothing but the clothes on their backs, even before they were hit with millions of dollars in interest on their loans.
The cattle farmers are now in debt to the National Australia Bank for double the amount they owed in 2012, after incurring hefty penalty interest for defaulting on their loans.
NAB still has not taken enforcement action against the Smiths and hopes to reach a settlement through farm debt mediation.
Mrs Smith hopes to be able to stay on the land, but took the bank's letter in January requesting a return to mediation as a worrying sign.
"We thought the inevitable has happened," Mrs Smith told the banking royal commission on Friday.
"We don't know what's going to happen now."
Mrs Smith described the 2013 mediation process as intimidating.
"We were told that if we didn't sign what documents they had that we would walk out of there with nothing but the clothes on our back," she said.
The Smiths agreed to sell one of their two properties and stock, but couldn't meet their requirements given the drought and cattle market conditions.
They have been struggling since 2012, hit by floods, a long-running drought and a slump in cattle prices caused by the 2011 ban on the live export of cattle to Indonesia.
"We've had to work very hard to keep our cattle alive, or keep some of our cattle alive, so we have something at the end of the drought to continue on with," Mrs Smith said.
In 2012 the Smiths owed about $850,000 on an overdraft and $3.1 million for their main loan.
Those debts are now $1.875 million and $5.937 million, mainly due to default interest.
The inquiry heard the default interest would be waived under further farm debt mediation.
NAB executive Ross McNaughton agreed with counsel assisting the commission Mark Costello that the default interest could place a further burden on farmers already stressed due to long-term drought.
Mr Costello asked: "What good is served from continuing to apply default interest that will almost certainly not be paid, and adding to the stress and burden of people that are already subsisting in a horribly difficult situation as things stand?"
Mr McNaughton replied: "I don't think there is any good in that."
The Smiths still have their two properties 'Limbri' and 'Oakvale' in north Queensland, but haven't had decent rain for years.
Mr McNaughton said NAB wants to reach a resolution that allows the Smiths to remain on one of the properties with cattle to earn an income.