Cri­sis: Sam Hen­der­son

Money Magazine Australia - - CONTENTS - Sam Hen­der­son is CEO of Hen­der­son Maxwell (hen­der­son­ and host of Sky News Busi­ness’s Your Money Your Call – Su­per.

Fi­nan­cial dis­tress oc­curs when a per­son or fam­ily is strug­gling to meet their per­sonal or busi­ness ex­penses. We saw wide­spread mort­gage stress across the US dur­ing the GFC and a cor­re­spond­ing rise of the debt con­sol­i­da­tion in­dus­try in Aus­tralia dur­ing the same pe­riod. But what do you do when you can’t pay your bills, and how can you help friends and fam­ily in times of fi­nan­cial dis­tress?

Let’s face it, most of us struggle to man­age the fam­ily bud­get. It’s not easy and we’re cer­tainly not taught how to do it in school. Con­se­quently, there are around 30,000 bank­rupt­cies each year and that fig­ure has been fairly con­sis­tent for some time. So, too, the level of busi­ness ad­min­is­tra­tions has been sit­ting around 10,000 since the GFC 10 years ago, with some slight up­ward in­flec­tion in re­cent quar­ters.

Ac­cord­ing to the Aus­tralian Fi­nan­cial Se­cu­rity Author­ity, the key rea­sons for per­sonal fi­nan­cial dis­tress are con­sis­tent and in­clude un­em­ploy­ment, ex­ces­sive use of credit and re­la­tion­ship break­down.

Im­por­tantly, if you, a friend or fam­ily mem­ber are in fi­nan­cial dis­tress, it’s just so im­por­tant to seek help. Ask­ing for help is okay. Many peo­ple feel too proud to reach out to a pro­fes­sional or friend, or too em­bar­rassed about their fi­nan­cial sit­u­a­tion. As I al­ways say to my kids, “a prob­lem shared is a prob­lem solved”.

Rest as­sured, there’s a whole in­dus­try to help peo­ple in dis­tress. A fi­nan­cial coun­sel­lor is trained to as­sist you with ad­vice about man­ag­ing your cred­i­tors and is trained in the work­ings of the Bank­ruptcy Act (1966), to ei­ther help you avoid bank­ruptcy or deal with it in the most con­struc­tive fash­ion.

So there are plenty of will­ing and ca­pa­ble pro­fes­sion­als trained to as­sist you or your friends and fam­ily to re­store fi­nan­cial con­trol and sta­bil­ity.

Fi­nan­cial dis­tress comes along­side other dis­tress­ing events such as re­la­tion­ship break­down or un­em­ploy­ment. These are com­mon and eas­ily over­come if you are open to seek­ing help. Peo­ple love help­ing you any­way, so let them do it.

Where to go

One of the best sources of help is Life­line (13 11 14). Wes­ley Mis­sion also takes around 6000 calls a year from fi­nan­cially dis­tressed peo­ple and there are also state-based or­gan­i­sa­tions that spe­cialise in as­sist­ing peo­ple dur­ing fi­nan­cially de­mand­ing times.

An es­sen­tial port of call is the Money Smart web­site (mon­, which rec­om­mends these or­gan­i­sa­tions:

NSW – Fi­nan­cial Rights Le­gal Cen­tre, phone 1800 007 007.

Tas­ma­nia – Con­sumer Credit Helpline (Ho­bart Com­mu­nity Le­gal Ser­vice), 1800 232 500.

Vic­to­ria – MoneyHelp, 1800 007 007, and Con­sumer Ac­tion Law Cen­tre,

(03) 9629 6300.

South Aus­tralia – Con­sumer Credit Law Cen­tre, (08) 8342 1800.

Western Aus­tralia, Con­sumer Credit Le­gal Ser­vice, (08) 9221 7066.

My ad­vice is to try to avoid bank­ruptcy if pos­si­ble. Although it does of­fer pro­tec­tion from ag­gres­sive cred­i­tors and in many cases in­volves wip­ing away the debt. That can cer­tainly help in re­liev­ing the men­tal anguish of con­stantly ow­ing money.

Bank­ruptcy does, how­ever, stay with you for a long time and can af­fect fu­ture credit ap­pli­ca­tions, travel plans and the abil­ity to act as a com­pany di­rec­tor, so coun­selling and seek­ing help to flesh out the op­tions and ram­i­fi­ca­tions of your de­ci­sions is es­sen­tial in cre­at­ing a clear path for­ward.

An­other op­tion is debt con­sol­i­da­tion. There are com­pa­nies that pack­age your debt for a fee and help you man­age your bud­get. This is a good op­tion if you have a house to re­fi­nance be­cause it can lower your in­ter­est re­pay­ments and re­duce no-pay­ment fees. But only en­ter an agree­ment if, in fact, it does re­duce your over­all fees, and al­ways get a sec­ond opin­ion be­fore com­mit­ting your­self.

Don’t let fi­nan­cial stress ruin your life or the life of your friends and fam­ily. Al­ways reach for help, which is avail­able in many di­rec­tions, and make sure you take care of your­self by en­joy­ing other ar­eas in your life.

Turn­ing your fi­nan­cial life around can be a hugely re­ward­ing, pos­i­tive and em­pow­er­ing process, and of­ten leads to fi­nan­cial abun­dance as you learn the hard way to en­joy a pros­per­ous life.

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