Carers under 30...

Help with debts

If your debts are getting out of control or you're struggling to make ends meet, it's important to act quickly.

Here are we explain the practical steps you can take to ease the stress, get your finances back on track, and understand your rights if a lender takes legal action to recover a debt.

• Talk to your credit provider
• Apply for a hardship variation
• Ask for help if you're struggling with debt
• What to do if your lender takes you to court

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 tell your credit or service provider that you're experiencing financial hardship. Taking action straight away can stop a small problem 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 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.

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.

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

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

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.

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.

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 - the Australian Financial Complaints Authority (AFCA). You can call them on 1800 931 678.

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.

If some of your financial problems are due to another person running up debts in your name, or pressuring you to spend money or sign up for a loan, you may be experiencing financial abuse. Visit our financial abuse webpage for a list of organisations that can help you.

If you are being intimidated by someone trying to recover a debt, there are things you can do to stop their threatening behaviour. See dealing with debt collectors.

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.

If you have received a notice that you are being taken to court for the debt you owe (such as a summons, statement of claim or liquidated claim), you must act quickly.

The first thing to do is to decide whether you agree that you owe the debt or dispute it. Legally, you may not have to pay the debt if it is an old one.

If you agree that you owe the debt but can't pay the full amount, ask your lender or credit provider whether you can pay off the debt by instalments.

Or you can go to court and make an application to pay the debt by instalments.

You have the right to request a postponement of enforcement from your credit provider to stop the repossession of your goods or home. Use our sample letter request for postponement of enforcement to draft your letter or you can go to court and request a postponement of enforcement.

You can talk to the Australian Financial Complaints Authority (AFCA) on 1800 931 678 about whether they can help you. This won't cost you anything. You will generally only be able to lodge a complaint with AFCA after you have tried to negotiate with the lender.

Importantly you do not have to struggle with this alone.

take care as always dear outlander

💜