Vul­tures prey on strug­gling Aus­tralians

Mercury (Hobart) - - BAREFOOT INVESTOR - KARINA BAR­RY­MORE

DEBT agree­ments have be­come the new scourge of our econ­omy and so­ci­ety. They un­fairly prey on cash-strapped house­holds and debt-laden fam­i­lies.

I won­der if any are owned by the banks?

Th­ese vul­tures of the debt in­dus­try are mak­ing lots of money and ex­tend­ing the suf­fer­ing of their vic­tims, oops, I mean their cus­tomers.

In most cases pri­vate debt agree­ments make the road back to fi­nan­cial balance even harder and longer, es­pe­cially com­pared with good old com­mon sense bud­get­ing and free fi­nan­cial coun­selling avail­able to every­one through the state and fed­eral gov­ern­ments’ Fi­nan­cial Coun­selling Aus­tralia.

The main aim of debt agree­ment com­pa­nies is to make a profit. And the source of th­ese prof­its are the very peo­ple they are sup­posed to be “help­ing”. Yes, the vul­ner­a­ble, debt laden, fi­nan­cially il­lit­er­ate and stressed out house­holds they are sign­ing up by the thou­sands who are des­per­ate for help.

Noth­ing like kick­ing peo­ple when they’re al­ready down. But there is one suc­cess story in this surge of peo­ple sign­ing up to debt agree­ments.

The com­pa­nies are mak­ing a for­tune. They seem to be spring­ing up all over the place and spend­ing hun­dreds of thou­sands of dol­lars on ad­ver­tis­ing, that must work.

Ac­cord­ing to gov­ern­ment sta­tis­tics, debt agree­ments are at their high­est level on record with al­most 13,600 peo­ple last year sign­ing them­selves over to th­ese com­pa­nies.

Sure, I get it. I un­der­stand how stress­ful it must be to have debt col­lec­tors chas­ing you. And I also un­der­stand how al- lur­ing th­ese ads and force­ful their sales­peo­ple can be to get peo­ple to sign up. Th­ese sales­peo­ple can also earn com­mis­sion or bonuses for each per­son they sign up.

A debt agree­ment is still an act of bank­ruptcy, it is not just a lit­tle side-ar­range­ment, a con­fi­den­tial deal be­tween friends, to pay part of the debt and for­give the balance.

Th­ese agree­ments are reg­is­tered by the Gov­ern­ment and are recorded on credit records. They are not a cost-free way to con­sol­i­date debts. If all the pay­ments ar­ranged by the debt agree­ment com­pany are not made, then the cred­i­tors can still de­mand their full amount owed plus in­ter­est!

Mean­while, the debt agree­ment com­pany has taken its profit and com­mis­sion and is off sign­ing up an­other sucker.

I know what some of you might be think­ing. A debt is a debt. Th­ese debt-laden house­holds shouldn’t have got into this po­si­tion in the first place. Right? OK, then let’s look at how they have got into “this po­si­tion”.

Ex­ces­sive use of credit is the big­gest rea­son for per­sonal in­sol­ven­cies. Ac­cord­ing to the lat­est sta­tis­tics from the Aus- tralian Fi­nan­cial Se­cu­rity Author­ity, the use and avail­abil­ity of credit (and ob­vi­ously the over con­sump­tion of credit) has for the first time over­taken un­em­ploy­ment and loss of in­come as the big­gest rea­son why peo­ple get into se­vere fi­nan­cial hard­ship.

And as the growth in credit has con­tin­ued, so has the growth in debt agree­ment com­pa­nies.

Brings us right back to the be­gin­ning of the debt cy­cle — the banks and lenders. An­other rea­son we need a royal com­mis­sion into the bank­ing in­dus­try.

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