Need help with debt? 3 options to consider if you can’t pay your loans

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While it may be tempting to avoid loan repayment, it’s important to continue managing your credit worthiness – even if you can’t pay them right now – in order to avoid defaulting on them. Defaults can cause some serious consequences.

If you find yourself unable to pay your loans because times are tough, here are some options to consider.

 

Consider rewriting your Budget

You may not actually be in financial hardship, it could be a budgeting problem. It’s a good idea to keep all of your receipts for a month, look over your banks statements and take an hour or so examining what you actually spend -you may be shocked. Buying breakfast, morning tea, lunch, coffees can add up to $60 per day, that’s $1,800 per month!

Such a simple exercise can save you a big headache and a lot of money.

 

Contact your bank to apply for Hardship assistance

All banks must abide by the National Consumer Credit Protection Act, as the title suggests, the act is designed to protect the consumer in the financial sphere. Section 72 of the act covers financial hardship, whereby you can apply for protection under this section if you are struggling with your repayments.

Simply contact your bank and advise them you would like to apply for financial hardship, you will then follow a relatively simply process that will, if all goes well, award you a 3 month payment holiday on your loans.

Not everyone will qualify and the bank will go through a thorough vetting process to assess the authenticity of your case. If you are genuinely in financial hardship, the bank should approve. If you case cannot be proven as financial hardship, they will reject your application.

 

Seek the assistance of a professional

There are different kinds of services available for you, depending on what outcomes you are looking for, for example:

  1. Bankruptcy Administrator: seeking bankruptcy or a Part 9 Debt Agreement
  2. Financial Counsellor: seeking a three-month payment holiday from the bank
  3. Professional Negotiator: Seeking part or full debt waiver from your banks. This is usually the best outcome as it immediately relieves you from your debt burden without impacting on your credit.

 

Bottom line

Loan repayments can be stressful, but if you’re having a tough time, there are options for help.

If you can’t pay your loans right now, the best thing to do is to research your options and pursue an outcome that best suits your needs and circumstances. If you avoid the decision, it could mean your problems will manifold very quickly.

If you need a debt negotiator, speak to us or connect with us at www.creditmediation.com.au 

If you want to find out how much you can save, try our debt calculator. or contact us. 

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