17th Aug 2017

How to manage overwhelming debt

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debt worry

Struggling with debt and money problems is tough, however, the worst thing you can do is ignore this issue and hope it goes away. Leaving it too long may limit the options you have.

Money problems can happen to anyone. Your income might have dropped because you retired, you had your hours reduced or even lost your job. Working to bring your debts back under control will be difficult and demanding, but necessary, even if you think your situation is hopeless.

Prioritise your debts
When you have limited income you soon realise the consequences are more serious if you don’t pay certain debts.

The size of the debt and the emotion attached to a possession or key asset (like the roof over your head) are factors that help you decide the relative priority of your debts.



By understanding your debts and your payment options and the legal consequences of not paying, you’ll be able to prioritise which debts to pay first. If you at least pay something towards your outstanding debts, your creditors may delay action against you and give you the opportunity to deal with the debt. The options available include:

  • applying for a hardship variation from your bank, utility companies and credit contracts to either reduce repayments, defer payments, or extend the term of your loan
  • checking to see if you have insurance that applies to your debts and loans
  • negotiating with your creditors
  • accessing your superannuation early to obtain a lump sum to pay off large, priority debts.

 

Watch out for ‘debt vultures’
If you are struggling with overwhelming debt you are not alone. A study released recently by the University of NSW found that nearly two million Australians are experiencing high financial stress.

As a result, there are now companies cashing in on this. You might have seen them spruiking their wares on TV, radio and online, promising to help Australians with financial problems.

Beware – these companies are not all that they seem. We call them ‘debt vultures’ because they prey on financially struggling Aussies with promises they can’t keep, hidden fees and, in some cases, leave people even deeper in debt. They offer services such as ‘credit repair’, ‘budgeting services’, ‘debt agreements’ and ‘debt negotiation’. While the slick advertising may promise a ‘life free from debt’, the reality is that this is a largely unregulated industry, with little or no protection for when things go wrong.

Get independent assistance
There is an alternative, available to all Australians. Financial counsellors provide a free, confidential and independent information service for people experiencing difficulty paying their bills including mortgages and day-to-day living expenses.

While you may feel embarrassed about seeking help, our National Debt Helpline phone counsellors don’t judge our callers’ circumstances, they just want to help and are professionally trained to offer assistance.

For help please go online or call 1800 007 007, Monday to Friday, 9.30am – 5pm.

Related articles:
Avoiding debt disaster
Do your debts die with you?
Is debt ruining your retirement?

 





COMMENTS

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MICK
25th Aug 2017
10:41am
None of us likes debt but debt is a necessary evil to get on in life. The problems which we all live with is unexpected things happening like world economic collapse, unemployment, illness and relationship breakup.
Those who are too heavily geared or who have zero savings always go down. The they need to get out of debt and have to either find a jobs quickly and/or reduce living costs or sell assets. When has it been any different.
My observations of genY is that this cohort has a belief that the world owes it a living and that it has a right to a lifestyle it can sometime ill afford. And then the inability to buy a house is the fault of the awful boomers, who may I add gave them most everything as they grew up.
I feel sorry for folk with debt which is thrust upon them. In most cases debt is self inflicted and so those caught by the trap need to extricate themselves. Such is life.
Old Geezer
25th Aug 2017
11:42am
Mick I teach people that prevention is better than cure. So put away a few dollars for a rainy day and continue to do so in case it pours. Then if something does happen you have the resources available to cope with it.

I give people a dentist scenario. Most people hate going to the dentist but if they have to go into debt to cover their dental bill it becomes a nightmare. So save that nightmare by having a few dollars set aside.

People can save on very little incomes and even on welfare given the right education on how to do so. So it has nothing to do with how much or how little you earn.
john
25th Aug 2017
12:58pm
Mick , I don't think this is a forum for bashing GenY kids , there are always people in every era who think the world owes them a living. There are plenty of Gen Y's that make the reality of life happen by working, studying and I am a boomer , I have seen many young folks get jobs and buy houses or get by and not whinge.
But today is a different story for many many more young people than it was for me when I was a teenager.
I had walked out of school into a job EVERYBODY did. Its not that way now, technology is pinching employment every minute of every day, and we have no plan as of yet to solve what we do with perhaps millions of unemployed some with no money or chances. I reckon we are in the mosr dangerous times for the human race right now. We have to have answes and soon or we're finished, population is a massive problem, we can't solve that, but we have to have work of some sort and hope, and if people get into finacial difficulty , we have to have legit help for them. Not Shylocks trying to rip people off. If you don't have a social helping plan you have social chaos, then we may as well all be dead.
MICK
25th Aug 2017
1:55pm
john: I have watched the current lot for the last 20 years. Whilst you are correct about life choices for all of us I have observed that genY want want want and then consume consume consume. When they have spent their money they cry poor, blame their parents and demand politicians appease them. It is what it is.
Your analogy to genYs who have made it is not a statistical account. There are always 'some' but my point was that for the vast majority the above is applicable.
Sure times are different and jobs have been turned into part time jobs. That one is understood.

Debt? Yeah it's a tough taskmaster which the unfortunate and weak minded cannot handle. Don't get me wrong, I feel sorry for people but most of the pain is self inflicted.
john
25th Aug 2017
12:50pm
My question would be , with these debt saving companies with fabulous offers to help out and make you debt free, if they are not real; , how on earth do they get liscenced to lend money? Like one I saw from $5,000 to $14,000 in that range anyway.
Also which ones if any are legit, and why doesn't a regulatory body look at which are good and which are shonky, if whats said about these saviours, is bad, then how do they operate.
WHY NOT A LIST OF THESE SMALL LOAN DEBT SAVERS, ones that are fair dinkum with no hidden fees? I am fortunate to not have had to use or experience these types of lenders, but I am continually baffled at how the TV sprukes these companies with adds that seem much too good to be true.
Openness must happen and the public should be told who is good and who is not, then the baddies get removed!
Old Geezer
25th Aug 2017
1:34pm
I have seen a couple of those so called "debt agreements". Having read them they to me are a warm and fuzzy term for bankruptcy as the conditions are very similar to going bankrupt. Knowing a little about debt factoring I will have a guess and say these debt vultures after you sign these debt agreements put one into bankruptcy and buy your debts for cents in the dollar. They then charge you a certain amount and make a big profit on what you pay them minus the small amount they paid for your debts.

Note if you go into bankruptcy yourself you don't have to pay back these debts at all if you have no means of paying them back.

These debt vultures "debt agreements" are not the same as the debt agreements available for low income earners. https://www.moneysmart.gov.au/managing-your-money/managing-debts/trouble-with-debt/debt-agreements
Raphael
25th Aug 2017
1:47pm
Live well within your means in good times and bad
Only way to have a happy financial outcome and stress free life
inextratime
25th Aug 2017
2:44pm
I got diddled out of $55,000 by a tax agent who was running under the logo of a well known accountancy organisation. The agent misappropriated a total of $571,000 and got a 15 month suspended sentence. So how do you put away money for that OG ?
Raphael
25th Aug 2017
4:14pm
How did you manage that ?

You must have signed something without reading it properly

Only yourself to blame
Old Geezer
25th Aug 2017
4:48pm
If he was running under a well known accountancy organisation then you have a claim against that organisation. Why haven't you claimed?

I had a claim against a real estate agent and it was settled by the insurance company of the banner under which he operated. There are steps you have to take but it's not that hard to do.

I agree with Raphael. To get that much misappropriated you must have signed off on something that allowed him access to the money. Just pay you fees up front instead of allowing them access to your money.
bluetigerrr
25th Aug 2017
3:03pm
This guy is good and has an excellent and helpful website if you are considering bankruptcy: fredappleton.com.au
Raphael
25th Aug 2017
4:16pm
Have you used him ?
Old Geezer
25th Aug 2017
4:50pm
Lot easier and cheaper to do it yourself.

28th Aug 2017
8:54am
Stop spending money that you don't have.
Sell what you don't need and be prepared to reduce your expectations in life.
I have at times worked 3 jobs at once. Day evening and weekend.
Raphael
28th Aug 2017
3:14pm
bit too late if youre a senior herby boy.

better to declare bankruptcy and go on the dole/OAP
Anonymous
28th Aug 2017
3:57pm
I raffy boy am self funded retired happy man with a wife 25 years younger than me. I live on lots of lovely super paid as a pension every fortnight.
I own 3 houses,a caravan and 2 4x4 s and a car.
I have lots of land and large house ,two dogs

Sticky to cross dressing sonny


Tags: money, finance, debt

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