Financial counsellors provide information, support and advocacy to assist people in financial difficulty.

Working in community organisations, their services are free, independent and confidential. Financial counsellors have an extensive knowledge of a range of areas of law and policy, including consumer credit law, debt enforcement practices, the bankruptcy regime, industry hardship policies and government concession frameworks.

Financial Counsellors are based in community agencies and are funded largely by either State Governments or the Federal Government.

Financial counsellors provide a FREE, INDEPENDENT & CONFIDENTIAL service.

From time to time, many people find themselves struggling to buy food, pay the rent or mortgage and can be juggling numerous debts. If you’re in this situation, a financial counsellor can help you understand your options so that you can get back on your feet.

There are free financial counselling services in every State and Territory in Australia (there is a map and contact details here).

Financial counselling summarized in two handy fact sheets:

How Does a Financial Counsellor Help?

Financial Counselling in a Nutshell

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Warning

If at any stage of your contact with a ‘financial counsellor’ or ‘debt counsellor’ they ask you to sign an agreement which includes paying any costs or fees, check this out carefully and get advice from a free Government funded financial counsellor.

There are a growing number of services advertising on television, radio and in local newspapers that say they can solve your debt problems.

Many of them are costly and don’t set out the full range of choices you may have. They may focus on one solution such as a Debt Agreement (under the Bankruptcy Act) or budgeting.

These “solutions” often provide greater financial benefit to the company offering them, than they will to you.

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SOURCE:     https://www.financialcounsellingaustralia.org.au/Corporate/Financial-Counselling

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Government backed schemes' (Part IX Debt Agreement)

Beware of debt consolidation that is actually a Part IX Debt Agreement under the Bankruptcy Act. These debt agreements often mention one payment and a government backed scheme. Debt Agreements have serious consequences and are usually expensive. Always see a financial counsellor before you consider a Debt Agreement.

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The FOS Approach to Financial Difficulty

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The Financial Ombudsman Service

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What is financial difficulty?

We consider that financial difficulty occurs when a consumer is unexpectedly unable to meet their repayment obligations.

This can be as a result of a variety of causes including accident, separation, death of a family member, unexpected medical or funeral expense, reduction of work hours, redundancy or a downturn in business.

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Each year, a significant proportion of the disputes FOS accepts involve financial difficulty.

Clearly, this is an area that requires much attention, not just by FOS, but by our members, and also the consumers who could potentially be involved in this type of dispute.

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• How FOS approaches financial difficulty taking into consideration legal principles, industry codes and good industry practice (PDF 333KB) (WORD 130KB)

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• Our power to vary regulated credit contracts (PDF 302KB) (WORD 126KB)

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• Working together to find solutions (PDF 267KB) (WORD 133KB)

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• Dealing with common financial difficulty issues (PDF 382KB) (WORD 133KB)

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• Early release of superannuation (PDF 277KB) (WORD 123KB)

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SOURCE:         http://fos.org.au/publications/our-approach/the-fos-approach-to-financial-difficulty/

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Steps to take if you're struggling to pay your mortgage

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STEP1 - Work out what you can afford to pay

If you're struggling to pay back money you owe, the first thing to do is to work out what you can actually afford to pay by doing a simple budget. How to work out what you can afford to pay.

 

If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.

If you can't afford to pay anything
Call us on 1800 007 007 straight away for advice.

 

 

STEP 2 -Contact your lender and ask for the 'hardship department'

The sooner you contact your bank or lender, the better.

Ask to speak with the hardship department and explain your financial hardship. The hardship department staff will explain your options and offer a hardship variation.

Make sure the hardship variation or repayment arrangement is:

• Affordable. If it isn't affordable, don't agree: insist on a repayment that you can afford.

• For an appropriate term. Don't agree to a short term arrangement if you know you need several months.

• Complete and covers what happens at the end of it. If you know you won't be able to afford higher than normal repayments when you get through your temporary difficulties, specifically ask for any arrears to be added to the loan and the term of the loan extended.

 

THE MORTGAGE RELIEF SCHEME

The ACT, Victoria and Queensland have government-funded mortgage relief schemes for home-owners struggling with short term, severe financial hardship. In these schemes, interest-free loans are offered to cover arrears and some future payments.

Each of these states/territories has their own strict eligibility requirements. For more information, contact:
Department of Revenue (ACT)
Housing and Community Building, Department of Human Services (VIC)
Department of Housing (QLD).

We recommend you speak to a financial counsellor if you believe one of these schemes may benefit you.

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STEP 3 - If you can't agree, you can dispute it

If you can’t come to an agreement that you think is fair, you have a right to seek ‘external dispute resolution’ if it's available in your state or territory. This free and independent service gives you an opportunity to explain how, working with your lender, you can get back on track with payments. Refer to Dispute Resolution (Step 2). 

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STEP 4 - Speak to one of our financial counsellors

If your problem still hasn't been solved, or you're feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.

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Resources

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Tips for negotiating a mortgage hardship variation (Word 28kb)

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Letter template to request a hardship variation for your mortgage (Word 31kb)

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Practical tips for dealing with mortgage stress, published by the Financial Rights Legal Centre (PDF 3.5MB)

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SOURCE:     http://www.ndh.org.au/Debt-problems/Housing/Home-loans

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Trouble with debt

Help with debts

If your debts are getting out of control or you are struggling to make ends meet, it's important to act quickly. Help is available. Here are some practical steps to ease the stress and get your finances back on track.

• Talk to your credit provider

• Apply for a hardship variation

• Ask for help

Talk to your credit provider

If you are finding it hard to keep up with utility bills (electricity, gas, phone or water), credit cards or loan repayments, the first step is to talk with your credit or service provider and let them know you are experiencing financial hardship. Taking action straight away can stop a small problem from becoming a big one.

Many companies have hardship officers who can assess your situation and work out what help is available. Whether they can help you will depend on why you are having difficulty making payments and how long you think your will financial problems will continue.

Hardship officers can also help you work out an affordable payment plan such as paying bills in instalments or temporarily altering your loan repayments.

These webpages give guidance on particular debt issues:

• Utility bills

• Credit cards

• Council rates

• Credit reports and credit repair

• Home loans

• Joint loans

• Debt consolidation

• Fines

• Travel debt

• Debt agreements

• Bankruptcy

• Repossessed goods

• Helping a friend or family member in financial hardship

Apply for a hardship variation

If you can't keep up with repayments on your credit cards or loans (for example, because of illness, unemployment or changed financial circumstances), ask your credit provider for a 'hardship variation'.

For a home loan, depending on when you took it out there are different thresholds (maximum amounts allowed) for accessing a hardship variation, see hardship threshold. 

How to apply for a hardship variation

1. Contact your lender or credit provider - by phone or in writing

2. Ask to speak to a 'hardship officer' or to 'customer service'

3. Give the details of your loan (account name and number, and the amount you pay each week/fortnight/month)

4. Say that you want to change your loan repayments because you are experiencing hardship (as set out in section 72 of the National Consumer Credit Code)

5. Explain why you are having difficulties making payments, how long you think your financial problems will continue and how much you can afford to repay

Sample hardship letters

The Financial Rights Legal Centre have a sample letter generator to help you creating professional and legal letters to send to financial service providers like banks, creditors and insurance companies.

How long should the lender take to respond?

When you apply for a hardship variation, the credit provider must respond to your request in writing within 21 days letting you know the outcome of your hardship request (unless you need to provide them with more information).

If the credit provider asks you for more information to help them make a decision, you must give this to them within 21 days. Remember that credit providers have a legal obligation to respond to you if you are having problems paying your loans.

How you can change your repayments

Here are some of the options you could discuss with your lender:

• Extend your loan period, so you make smaller repayments over a longer period

• Postpone your repayments for an agreed period

• Extend your loan period AND postpone your repayments for an agreed period

• Other ways to make your loan repayments more affordable

When negotiating a repayment plan, make sure you can afford it. There is no point agreeing to an amount that is too high for you to pay.

If you find you can't stick to the new arrangement, tell your credit provider straight away. Keep paying as much as you can afford, even if it is not as much as the credit provider is asking for.

 

Case study - Megan seeks help

Megan is a single mum with two kids. She has been struggling to pay her bills for a while and her credit card payment is now two weeks in default.

Megan's friend suggested she see a financial counsellor. Megan met Jenny, her local financial counsellor, and Jenny was able to help her negotiate a repayment plan with her credit card provider and work out a plan to manage her other bills.

You can complain

If your credit provider refuses your hardship application, they must give reasons. If you are not happy with their response you can ask to speak to their internal complaints section.

If you are still not satisfied with the outcome, you can lodge a dispute (for free) with your credit provider's external dispute resolution(EDR) scheme - either the Financial Ombudsman Service (FOS) 1800 367 287 or the Credit and Investments Ombudsman (CIO) 1800 138 422.

Ask for help

You don't have to go it alone. There is free and confidential help available to assist you to get a clear picture of your situation and understand your options:

Financial counselling: A free service offered by community organisations, community legal centres and some government agencies, see financial counselling.

Free legal advice: Available from community legal centres and Legal Aid offices in each state and territory, see free legal advice.

If you're in a crisis and need emergency relief or emotional support see our urgent money help webpage.

Debt solution companies

It might sound like a good idea to pay someone to help fix your credit history, but credit repair agencies and debt solution companies may not always be able to do what they claim. Find out what debt solution companies can and can't do for you.

 

 

Money problems are stressful but you do have options. Take action now by talking to your credit or service provider and working out a plan to get yourself back on track. You can apply for a hardship variation if you need to, or get help from a financial counsellor.

Related links

• Can't pay your debts factsheet

• Problems paying your mortgage

• Managing on a low income

• Building an emergency fund

• Legal action lenders could take

• Helping people in financial difficulty - Factsheet for community workers

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SOURCE:    https://www.moneysmart.gov.au/managing-your-money/managing-debts/trouble-with-debt#talk

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