Bessie Hassan | Money expert at finder.com.au
Like most things in life, your finances can take an unexpected turn which may leave you vulnerable to financial hardship. Whether you’ve lost your job, are going through a divorce, or are unable to work due to injury or illness, there are many situations which may lead you to lose a grip of your expenses.
For many, asking for assistance can be difficult, especially when it comes to money. However, asking for help when times are hard is crucial and despite common belief, it’s actually not as difficult as you may think.
Most service and utility providers including banks, have financial hardship policies in place which may alleviate financial pressure when the going gets tough.
Here are some easy steps to follow if you find yourself in one of these situations:
Identify that you need help, look out for the signs
Financial hardship can be a result of many different things or a combination of things happening in your life. If you’re currently faced with a situation such as a job loss or if your financial payments have simply become too much for you to currently bear, don’t ignore it.
Identifying you’re struggling with debt is the first step to addressing the issue and improving your financial wellbeing. Falling behind on your credit card payments or getting ‘late payment’ reminders for your internet bill could indicate you’re under stress.
Read your providers’ Financial Hardship Policy
The next step is to find your provider’s Financial Hardship Policy by simply searching ‘financial hardship policy’ on their website and reading it to see how they can support you. Different banks have different financial assistance programs and levels of support available.
Some providers will treat customers on a case-by-case basis but typically the policy will depend on the provider, the type of product or service, and the severity of your situation.
Remember, it doesn’t necessarily have to be a credit card or home loan bill you’ve fallen behind on, it could also be a smaller cost such as your mobile phone, internet or electricity/gas bills.
While banks are often required to allow flexible payment arrangements where your monthly repayments can be reduced if you can show that you’re experiencing financial hardship, other providers such as electricity or gas providers often have extras as part of their policy like customer usage audits and flexible options for the purchase of replacement energy appliances.
Review your provider’s program to see what kind of assistance they can offer and if you’re eligible to apply – if you don’t ask, you don’t receive!
Ask your provider for help
Next step, contact your provider to let them know you’re struggling with debt and could use some help. Even if don’t feel like you’re eligible, contact them and explain your situation and why you can longer service your payments or bills.
Have your documents handy so you can fast-track the process. For example, your provider may need to see details of your income and expenses or you may need to show a medical certificate.
Whether you enquire online, over the phone or at your nearest branch, it’s best to be upfront and honest about your situation so you can talk through your options. For example, some banks will allow a ‘repayment holiday’ if you can prove that you’re no longer in a position to meet your monthly repayments due to an unforeseen event or circumstance.
Ask a professional for help
In addition to speaking with your provider, you might also want to consider speaking to a financial counsellor who may be able to offer assistance specific to you. There are many banks and online services that offer financial counselling services for free, where you can gain help and financial feedback. Consumer education websites, such as ASIC’s MoneySmart and Australian Retail Credit Association’s (ARCA) CreditSmart are useful resources for finding free counselling services. Seeking professional expertise, will not only help you to breathe a little easier now, it will give you the knowledge needed to make better financial decisions in the future.
It’s important to ask for help before a moment in time becomes a moment which impacts you long-term.
Falling behind on a payment can impact your personal credit score, which could affect your ability to qualify for finance in the future so it’s important to deal with the situation here and now. It is however worth noting that Hardship customers are exempt from the new Comprehensive Credit Reporting regime for the next 12-months.
The sooner you seek financial assistance, the sooner you can get back on your feet!