Financial counsellor Jenny talks about dealing with financial hardship.
The increase in use of credit cards, short-term loans, and interest only mortgage loans can create an unmanageable financial situation when circumstances change. A loss of a job, a relationship breakdown or a significant illness can have a major financial impact, and it is often in these instances that people seek the services of a financial counsellor. Financial counsellors cano guide clients through the process of what options are available to them in a private and confidential environment.
Losing the home
The prospect of losing your home because you cannot make the ongoing mortgage payment can be terrifying. Where there has been an unforeseen change to your financial circumstances, financial counsellors can advocate for short or medium term hardship arrangements. This can often provide stress relief for many clients whilst we work through the person’s situation and options.
Sharon recently visited a financial counsellor in Fremantle, as her partner had passed away and she was left with a reduced income and limited understanding of the state of her finances. English was not Sharon’s first language.
- Sharon had received a default notice for mortgage arrears – this meant that if the arrears were not addressed, the bank would ask for full payment on the loan.
- Sharon was not in a position to pay the outstanding arrears, and did not know how the process worked – she thought she was going to lose her family home.
When Sharon approached financial counselling, she was upset and anxious about what was going to happen to her if she lost her home. After advocating on behalf of Sharon with the bank and providing documentation showing that she needed extra support as she was a vulnerable client with limited English, the bank agreed to a variation to her contract.
This stopped the current debt collection action and an agreed payment plan was put in place. An amount was set up for a six-month payment arrangement which allowed Sharon time to work through whether she wanted to keep the home or sell the property.
Sharon was able to maintain the payment arrangement for six months; the arrears were placed at the back of the loan meaning she was able to stay in her home. The ongoing payments were manageable on her income and she was able to meet all other household expenses without going into further debt.
In addition, the financial counsellor made Sharon aware of entitlements that may be accessible through her late partners’ superannuation.