Caronavirus or COVID-19 has thrown the entire world into chaos. Whilst we are all attempting to adhere to social distancing in order to flatten the curve, there is also the financial chaos which needs to be dealt with.
Have you been stood down / laid off / had your income reduced?
If you are one of the many whose income has been affected, you are no doubt wondering how long this situation will go on for (as we all are). For a long time, many Australians have simply been living pay-to-pay where any unexpected expense caused financial stress. Fast forward to COVID-19 where incomes have been halved or completely wiped out and these Australians are wondering how they are going to get back on their feet ever again.
So, what should you do? The answer, in the short term, is surprisingly simple: Communicate.
As we all know, COVID-19 is a global pandemic. Everyone is aware of it. Everyone knows that businesses have shut down, employees laid off, unemployment queues seemingly endless. If you are simply unable to pay your bills, debts and other repayments, you must communicate to your Creditors. If they do not know that you are struggling it will be assumed you are choosing not to pay.
All lenders are required to have a Hardship Provisions designed to set out the criteria of how the Creditor can assist its customers when they are facing temporary financial hardship. Creditors repeatedly tell us they want the opportunity to communicate and assist their customers directly prior to more serious options being explored. Yes, they may well be over-subscribed at the moment, but be patient as there are many people in that boat with you.
Each Creditor will have their own criteria and assessment process so you will need to apply separately to each one. For this reason it is possible that you meet one criteria and not another. Additionally, each Creditor may offer different arrangements; it is crucial you note the terms of each arrangement and maintain accordingly or if unable to do so that you advise the Creditor as soon as possible.
Many banks have been pro-active in their treatment of mortgage-holders; we are hoping to see these measures applied to a far wider range of loans however the reality is that each lender will approach this crisis in their own way and will have their own way of addressing the needs of their customers.
NOTE: Its not just lenders who have Hardship Policies
Any provider of credit will have a hardship policy; utility companies like electricity, gas and water; telecommunications providers; your local council or shire in respect of Rates; even the ATO!
Hardship is a Buzz Word
Think of “Hardship” as a buzz word; as soon as you advise your lender or credit provider that you are in financial hardship, they need to take steps to assess and, where applicable, assist you. Again, we must stress that during these unprecedented times, you may need to wait a little longer than usual but there are a few things you can have ready to make the process smoother;
Items you will need to apply for Hardship Relief
Your lender or Credit providers commonly want much of the same information provided, We’ve put together a list of information that you are likely to be asked for during a Hardship Application:
- Proof of changed circumstances; such as a notice from your employer detailing your stand-down/lay off/reduced income.
- Details of current income; if you have been made unemployed, a copy of your Centrelink claim. If your income has been reduced, then payslips or a letter from employer.
- Other debts; some lenders may want details of all other debts you need to repay in addition to theirs.
- Household budget; As part of their process, lenders may ask for a copy of your living expenses to determine your affordability. There is a free budget planner available from our website https://www.lifeafterdebt.com.au/budget-planner/
This is by no means a comprehensive list, but it is typical of the information Creditors will need from you at some stage during the Hardship Application process.
What is Hardship Assistance?
In a nutshell, Hardship Relief = Temporary Assistance.
If granted, hardship assistance can provide you with a limited time to reduce or even suspend repayments whilst you seek a long term solution to your circumstances. As a guideline, hardship assistance, when granted, is usually for 3 months. Given the extraordinary events we are experiencing, it is anticipated that Creditors’ hardship policies will be amended and even continue to evolve as this crisis proceeds.
What Other Help Is Available?
Financial Counselling; If you are struggling with debts, bills, rent, maybe unsure of your rights, need advice on Centrelink benefits or accessing your Superannuation, want to access a hardship variation, are being unduly harassed by collection agents, or are considering bankruptcy then there are trained professionals available to help and advise you free of charge.
How do I find my nearest Financial Counsellor?
Services are usually provided by local councils or not for profit charitable organisations such as Anglicare, The Red Cross, CAP or Salvation Army. Here is the link to find your nearest Financial Counsellor / office, http://ndh.org.au/Talk-to-a-financial-counsellor/Find-a-financial-counsellor/.
Who can help with other issues like loss of income or bills to pay?
- If your mental health is being affected, contact Lifeline on 13 11 14 or Beyond Blue on 1300 22 46 36
- Contact Centrelink on 13 24 68 to discuss what support payments you may be eligible for.
- Contact your nearest Financial Counsellor via the National Debt Helpline on 1800 007 007
- Contact your utility supplier to discuss HUGS grants or time to pay arrangements
Life After Debt® is a professional Insolvency practice; we aim to provide clients with information on debt options and negotiate repayment arrangements with Creditors. Our service relieves the stress of unmanageable debt. For more information visit www.lifeafterdebt.com.au