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A Handy Guide For Getting Out Of Debt

Although all debt is not bad debt, it can still get out of hand quickly if you don’t stay on top of your repayments and take the time to understand in detail how new loans or credit card purchases will affect your overall budget. We are going to give you some practical ideas and advice to ease the burden that debt may be causing in your life, and to help you minimise your liabilities in the long term.

Speak to your service providers

If you find yourself in a difficult financial position and are struggling with repayments of loans, bills or insurances, then speaking with your service providers is a great way to better understand your options and to come up with a plan to move forward.

Most major vendors, such as utility companies, have a team that specialises in helping customers who are experiencing financial hardship. If you are facing a situation where you may not be able to pay your bills on time, then it is better to reach out proactively and ask for help, rather than letting the bill remain unpaid beyond the due date and accumulating late fees or other charges.

Customer service teams are trained to help you come to a beneficial outcome for both parties. This might be an extension to the deadline or allowing you to pay the bill off in instalments over an extended period of time while you get yourself back on your feet. If you find yourself in this situation, you may be surprised at how willing some companies are to help if you just ask.

How to handle loan repayments

Loan repayments are a little different to monthly bills, as banks and lending institutions base their planning around the set repayments that you agreed to when you took out the loan. That being said, you will probably find that similar to utility companies, these institutions have ways to help their customers who might be going through financial hardship.

Again, the best thing to do if you find yourself struggling to meet your repayments is to reach out to their customer service team and start a conversation. They will most likely try to understand the cause of your financial struggle and assess whether this is a short-term or a long-term problem.

Applying for a hardship concession

Most of our clients are actually unaware that there is a formal process that banks and lending institutions must adhere to by law when dealing with customers who are facing financial hardship. The process is detailed in the National Consumer Credit Code and is there to support you.

The steps to applying for financial hardship are quite straightforward:

  1. Contact the bank or lender via phone or in writing.
  2. Address your requests specifically to a hardship officer if possible, but if not, speak with the customer service team to find out who the best person is to address your problem.
  3. Provide as much detail about the loans or repayments that you are struggling with, along with details about what is causing your financial hardship and how long it is likely to continue.

Once you have logged your case, the bank has 21 days to formally respond to you with the outcome of your assessment. In most cases you will be able to work together to come up with a solution that is in the best interest of both parties.

Likely outcomes of a hardship notice to a lender

There are many possible solutions that your lender might offer to help minimise the stress or hardship that your current payment schedule is causing you. These could be anything from extending your loan period, which means your repayments will be smaller; postponing a payment while you get back on your feet; or in rare cases changing the terms and interest rates of your loan in line with current rates, if they are better than when you originally took out the loan.

Regardless of the outcome, any relief is a big help when you are struggling to make payments. The best advice we have is not to be afraid to start the conversation and to ask for help. Many banks and lenders are more than willing to help their loyal customers.

At FutureNow Finance, we can help you to structure your debt so that it is easily manageable. Contact us today if you’d like to discuss your options. Call 1300 013 730 or email hello@futurenowfinance.com.au.