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Step-by-step out of debt

by Elizabeth Minter

finance planning

A recent survey has revealed alarming statistics about just how many Australians are struggling financially. About 40 per cent suffered some form of financial hardship during the survey period, with more than 50 per cent of low-income earners reporting hardship. Steep increases in what households have to pay for gas and electricity are playing a large part in that financial pain.  

So if you find yourself juggling bills between pay days and are tempted to sign up to that credit card to buy yourself some time, please don’t. You have other options that will help you get off that debt merry-go-round. And the earlier you take action and tell your banks and energy companies of your situation, the better it is for you. 

The first step is to go to the National Debt Helpline website. This site discusses all the common financial problems people face – including paying their gas, electricity and water bills; their internet and phone bills; their mortgage or rent; and their car loans – and provides a wealth of information on how to tackle your individual problem.

As the site makes clear, the starting point is always to work out what you can afford to pay towards your debts. There are many tools available to help you work this out, but ASIC’s MoneySmart website has an excellent Budget Planner.

The National Debt Helpline website then takes you through comprehensive step-by-step guides. This involves contacting the various hardship departments, signing up to an affordable, sustainable payment plan based on your calculations, and how to lodge a dispute if your offer of a payment plan is not accepted. Among your options are to temporarily stop payments, extend your loan, ask for the debt to be waived due to extenuating circumstances and ask for interest and fees to be frozen.

It is also important you know your rights; for example, that under the National Credit Code, organisations like utility companies, telcos and credit providers have obligations to provide reasonable assistance to customers in financial hardship.

The site includes numerous template letters, such as how to request a hardship variation from your creditor and how to cancel a direct debit. There are plenty of handy hints and tips and clear explanations of the risks of using credit.

And by taking control of your situation and using the tools on the website to advocate on your behalf, you have taken a big step in that all-important journey of empowerment.

National Debt Helpline: ndh.org.au

Elizabeth Minter,
Communications manager,
Financial Counselling Australia

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