Getting ahead of debt
Facing financial difficulties? The word from experts is to get on the front foot and seek help as soon as possible
FINANCIAL experts are expecting to see bankruptcies and home repossessions rise in the next few months as people start to default on “buy now, pay later’’ loans taken out during Covid and homeowners are unable to make mortgage payments.
It comes as banks have begun urging customers to come to them for help sooner, rather than later, so they can put payments on pause or restructure loans or payments before the situation becomes unmanageable.
“What we see is that 90 per cent of customers that get in touch with us early, get back on their feet within 90 days,” NAB’S lead financial counsellor support Anita Murphy De Guzman said.
“So generally, the earlier they reach out for help, the sooner we can help and the better for them in the long run.”
Ms Murphy De Guzman said some customers may feel fearful, nervous or embarrassed to call the bank, but they were there to help and that repossessions were “very, very rare”.
The bank also provides access to free, independent financial counsellors.
She said NAB Assist, the department that helps customers with their finances, now had a team of 600 having expanded during Covid.
Financial Rights Legal Centre spokeswoman Jane Foley said it was expecting to see an uptick in people seeking advice in the next few months.
She said some people who had taken out three, four or even five “buy now, pay later’’ loans during Covid, were now defaulting. Others were seeking help for bankruptcy claims from strata companies, cracking down on those with outstanding rates bills.
And, while the Morrison government banned banks from repossessing homes during Covid, with the end of lockdowns and interest rate rises, Ms Foley said that was about to change.
She urged people worried about their finances to seek help from a free financial counsellor as soon as possible.
And she warned people not to be tempted to get their credit report “cleaned” by rogue companies, or get their debts rolled into one, as often those businesses “have an agenda”.
“If you are experiencing temporary financial hardship, banks legally have to help you,” Ms Foley said.
However, she said it was best that homeowners sought financial advice first so that they didn’t agree to new terms they couldn’t meet. financialrights.org.au