- Emergency relief
- Financial counselling
- No Interest Loan Scheme (NILS)
- Unexpected events
Should I just go bankrupt?
The ramifications of bankruptcy can affect your personal and work life. It may even have serious implications on your future employment prospects. Bankruptcy might not even make your hardship go away.
We urge you to consider every possible option available before filing for bankruptcy. A financial counsellor will be able to assist you in working out the best course of action for you to take.
What is the difference between a debt agreement and bankruptcy?
The Australian Financial Security Authority has an informative table that you can use to compare the formal options of bankruptcy, debt agreements and personal insolvency agreements.
The bank won’t talk to me.
If you have tried to contact your bank and were refused service or have been unable to reach an agreement, contact a financial counsellor for help. A financial counsellor will be able to assess your situation and start talks with your bank on your behalf, or work out why the bank may have been uncooperative.
If you wish to complain about your bank or financial institution, you must always try to resolve the complaint with the organisation first. There are then some other ways to make your concerns heard. Read MoneySmart’s ‘How to Complain’ page for more information.
- Track your income and expenditure so you know how much money is going in and out of your bank account, and what you spend it on.
- What expenses seem excessive? Why are they so much?
- Create a budget. MoneySmart has a budget planner you can save and edit. The planner helps you work out payment periods as well.
When you have created a budget for your current situation , consider why you want to manage your money better, and develop some financial goals for yourself.
Adjust your budget to see what you can save money on. Financial counsellors can help you make a budget as well as plan your savings.
You can see what benefits are available by looking at the ‘Guide to Australian Government Payments’.
No. Adverse listings on your credit file will affect your ability in obtaining future credit. To learn more about credit reporting and dispel some of the myths about what can be listed, check out CreditSmart.
Taking on new debts before you have paid off old ones is not advisable. We suggest you visit a financial counsellor to help manage your current credit problem and learn strategies for managing your finances into the future.
I can’t pay my loan off
Contact your credit provider as soon as possible, and be honest about your circumstances. Most providers have hardship policies which assist people who are having trouble paying. The remedy usually involves you getting a ‘hardship variation’ from the lender and working out with the provider a new repayment plan, one you can afford. The provider may agree to suspend or waive the interest, depending on your circumstances and their particular policies.
If your lender refuses to negotiate a hardship variation you can afford, you can lodge a complaint with the lender (you may hear this referred to as ‘internal dispute resolution’ or IDR). If that doesn’t work, you can go to external dispute resolution (EDR). All Australian Financial Services must belong to an external dispute resolution scheme. A list can be found here. For credit issues specifically, you can go to:
What are the consequences for not paying my debts?
- The lender may charge additional fees and interest on your account, increasing the total amount of your debt
- Your credit report may show that you defaulted on a debt or that payments over 14 days late have been recorded as ‘late payments’, and this may make it harder for you to obtain credit in the future
- You may be pursued by debt collectors
- Your lender may take legal action, including but not limited to: suing you for the amount owed, having you declared bankrupt, or repossessing your home or other assets.
If your lender has started legal proceedings against you it is vital you contact a legal service for advice as soon as possible.
What happens if I can’t make payments?
Your debt will usually be sent to a debt collector, who will attempt to collect what you owe on behalf of the lender. The debt collector might be the lender themselves or someone independent of them, such as a debt collection agency.
Lenders have a right to be paid, but you have a right to be treated with respect. There are laws which govern when and how a debt collector may go about their business. If you feel harassed, threatened, taken advantage of or deceived, contact the Department of Commerce or ACCC for help and further information.
A financial counsellor may be able to offer you advice on dealing with debt collectors and resolving your debt problems.
Do I get bad credit?
You will get bad credit if you don’t pay your debts within an appropriate time-frame. If you are having trouble managing your repayments:
- Contact your lender right away.
- Tell them you are experiencing financial hardship. Tell them why.
- Be honest about your situation
- Ask for a hardship variation.
- Negotiate a repayment plan you can afford.
- Keep records of the discussion and what is agreed.
- Talk to a financial counsellor. A financial counsellor may be able to help you talk to your lender and assist you manage your budget so you can pay your debt down faster.
- Get free legal help. Community legal centres and Legal Aid are free and available in every state and territory.
I can’t pay my credit card bill
Contact your credit provider as soon as possible, and be honest about your circumstances. Most providers now have hardship policies which assist people who are having trouble paying. The remedy usually involves you getting a ‘hardship variation’ from the provider and working out with the provider a new repayment plan, one you can afford. The provider may agree to suspend or waive the interest, depending on your circumstances and their particular policies.
If your provider refuses to negotiate a hardship variation you can afford, you can lodge a complaint with the provider (you may hear this referred to as ‘internal dispute resolution’ or IDR). If that doesn’t work, go to external dispute resolution (EDR). Complaints about credit cards go to the Financial Services Ombudsman.
My loan’s been given to a debt recovery agency – what now?
Debt recovery agencies, or debt collectors, collect debts on behalf of the lender. They will pursue you through the mail, phone calls and visits to your dwelling until the debt is paid in full or a payment agreement is reached.
When you are contacted by a debt collector:
- be cooperative
- be honest about your financial position, including any other debts
- return calls or correspondence promptly
- negotiate a repayment arrangement you can afford
- do not agree to anything you don’t understand or are unsure you can afford. It is illegal for a debt collector to intimidate you or anyone in your life into an agreement.
- if you feel you can’t afford any payments or are confused about what you can manage, call a financial counsellor for help.
Explain insurance on credit cards and loans (AKA Consumer Credit Insurance).
Sometimes credit cards and loans come with insurance, or you are offered it at the time you sign up. This is called consumer credit insurance. It may provide you with some cover if you can’t meet the repayments because of involuntary unemployment, illness, injury or death. Consumer credit insurance may also cover stolen cards or when/if goods bought using the credit are damaged, lost or stolen. (Always check the Product Disclosure to ensure the insurance meets your needs).
Consumer credit insurance is a double-edged sword. Some things you should know about it:
- You might already have consumer credit insurance and not know about it. Contact your lender and ask for a copy of the contract to check if you’re not sure.
- Buying consumer credit insurance is not compulsory. Only buy it if you will receive real value for money.
- Most policies don’t cover you for the full amount of your debt, just a percentage.
- If your claim is approved, you do not receive the money. It’s paid directly to your credit or finance provider.
It’s important to understand exactly what you’re in for if you already have, or are considering buying consumer credit insurance.
- MoneySmart’s page on consumer credit insurance
I live overseas but I have debts in Australia. What do I do?
Your lender may pursue you for debts even if you are living in another country. It’s recommended you contact the lender and come to a repayment plan as soon as possible. Remember that transferring money internationally can incur hefty fees, so be sure to include them in your calculations.
You could also search the WACOSS Community Service Directory for your local emergency relief provider.
How can I save when I am on Newstart and cannot get work?
How can I find a job so I can afford my essentials?
- Volunteering can act as ‘proof’ you are a keen, reliable worker. Search Volunteering WA to start with.
- Training (free). See what is available that allows you to upskill for free.
- Keep your resume up to date.
- Make sure you tailor each application to the organisation advertising.
- Be on time for interviews and prompt at responding any emails or phone calls you receive during the application process.
Will my asking for the help of a financial counsellor be recorded?
The agency who works with you will keep a file of your case. Your identity and file will be kept confidential – no one else has to know you asked for help. The financial counsellor can only share information if you have provided written authorisation to do so. The only exception is if your file is subpoenaed. In this case, the agency must give your file to the court.
Who do I contact if I think I’m in financial hardship?
Contact the hardship department of your bank, lender, or utility. Do this as soon as you have trouble making ends meet. The hardship department’s job is to assess the level of difficulty you are in and to reach an agreement with you on how you can pay off your debt.
- Review your income and expenditure. Create a budget so you know exactly what you’re currently spending and consider any future goals (aside from buying a house) you should be saving for.
- Have a look at what and where you’d like to buy: consider location, rates, maintenance, interest rates, transport issues, what services your family needs and how close they are.
- Remember that you need a sizeable deposit to get the loan to buy a house. You may get a lower interest rate on the loan if you can put down more than the bare minimum, which is usually around 5% of the purchase price. Ideally, you should put down a deposit of 20% or more. Further reading:
I’m being evicted.
You can appeal decisions made by the Department of Housing (Homeswest). Look at the Department’s Appeals Process page for what you can and cannot appeal and how to do so.
If you’re renting in the private market and think your landlord has wrongfully terminated your lease, talk to the Department of Commerce or Tenancy WA. Tenancy WA is a community legal centre specialising in residential tenancy matters.
My house is going to be repossessed.
There are a few important things to know about house repossession. The first is that your lender is required to issue you with a default notice before taking any enforcement action. This applies if your mortgage was entered into on or after 1 November 1996. The default notice must allow you a period of at least 30 days to remedy the default. Further information regarding enforcement proceedings can be found here.
The second is that if you talk to your lender , you may still be able to apply for a hardship variation to your loan and reach a repayment agreement with your lender, as long as your lender has not had judgement entered against you in a court proceeding. If your lender refuses a plan that you can manage, you can lodge a complaint with the relevant external dispute resolution scheme (EDR). If you do this soon enough the complaint will halt any enforcement action (e.g. court proceedings and repossession).
Talk to your lender or a financial counsellor if you’re not sure all alternatives have been tested. Further information regarding Mortgage Stress is available here.
No Interest Loans Scheme (NILS)
What is a NILS loan?
The No Interest Loan Scheme provides individuals and families on low incomes access to safe, fair, affordable credit. Non-cash loan amounts are between $300 – $1,500 for essential products and services such as fridges, washing machines or car repairs. Repayments are made fortnightly at $3.00 per $100 borrowed, until the loan is paid in full. To enquire further about a NILS loan call 13 NILS (13 64 57).
You can also find out more about NILS loans and the process by going to the WA NILS website.
Can I get hold of my superannuation early?
Superannuation is only released early under special circumstances. It is very important you consider the consequences of using your retirement funds to solve your current problems. We recommend talking to a financial counsellor, who will be able to work out your options based on your particular circumstances.
What’s superannuation insurance?
A lot of super funds arrange insurance cover for their members – you might have insurance and not know about it! There are three usual types of cover:
Your employer’s default fund must offer a minimum level of life insurance. Although you might not have known about the cover attached to your superannuation fund, it’s still an insurance policy. As such, you pay insurance premiums, which are deducted from your super account balance. You can choose to increase or decrease your level of cover to suit your needs.
The Product Disclosure Statement (PDS) of your super fund will list what cover is available. The insurance you have may be listed on the detailed statement the super fund sends you, and you can also find out what you’re covered for by calling your super fund. Ask as many questions as you need to—it’s your money. If you want to change what you are covered for it’s best to do a lot of research and/or talk to a financial advisor about your circumstances to decide what is best for you. A financial counsellor can’t make recommendations about where to invest your money.
- MoneySmart’s insurance through super.
I got into a car accident and don’t know what I have to do.
When you get into a car crash, there are some boxes you have to tick to make sure your rights and responsibilities, and those of any other people involved, are observed.
- Collect details of the crash:
- Date and time, road and weather conditions
- Exact location
- Details of any other drivers including name, address, contact number, insurer, vehicle description
- Details of any witnesses
- Draw a map of what happened
As soon as possible, do the following:
- Report the accident to the police. This is only compulsory if the damage to vehicles or property is likely to cost more than $3,000.00 to repair, or if the owner of the damaged property is not present. If you’re not sure of what the damage might cost, report the crash.
- If someone has been injured you must report the crash to the police and the Insurance Commission of Western Australia, regardless of the estimated cost.
- Put in a claim to your insurance provider, if you have insurance.
- Do not lie or omit information. Provide all the facts (and only the facts) you have.
- Even if it appears the accident was your fault, do not admit responsibility or offer to pay for damages. This can affect the decision your insurer makes.
Once you have reported the accident to the necessary authorities, all you can do is wait.
The MoneySmart website has information on reducing electricity, water and gas, as well as other household expenses. We recommend reading this entire page!
We also recommend doing up a budget. A budget lets you work out where your money goes and what you can afford. Try the MoneySmart Budget Planner. It’s easy to use and you can save the budget and go back and edit when your circumstances change.
I can’t pay my utility bill. What do I do?
Contact your utility provider as soon as possible, and be honest about your circumstances. All WA utilities—water, electricity and gas—now have hardship policies which assist people who are having trouble paying. The policies usually involve either:
- Organising a pay-by-instalments plan
- Waiving all or part of the debt
You may also be eligible for a rebate. A list of what is available is on the MoneySmart website.
Your utility may offer you assistance under their hardship policy or a HUGS (Hardship Utilities Grant Scheme)
It is also possible to arrange to pay your utilities bills directly through Centrelink. That is, the money from your benefits goes straight to your utilities before what remains is transferred to your bank account. This arrangement is called Centrepay.
I don’t agree with my utility. Can I complain?
If a utility seems unfair or uncooperative, you can make a complaint: