Everyday money

Sometimes, Centrelink pays more than you are entitled to.  When this happens, even if it is not your fault, the amount you were overpaid is a debt owed to Centrelink or the Family Assistance Office.  That debt is called a Centrelink or Family Assistance Office (FAO) debt.

If Centrelink thinks that the overpayment is due to fraud they may ask you to come in for an interview and they may prosecute you for a criminal offence.  You should get legal advice immediately if this happens.

Just because Centrelink/FAO says you have been overpaid does not mean they are right.  They can make mistakes too, and sometimes act on wrong facts or wrongly apply or interpret the law.  You are entitled to ask for the details of:

• •  What they have paid you each fortnight and
• •  What they say you were entitled to for the same period.

If you believe you owe the debt you can:

• •  Ask Centrelink to waive the debt so you don’t have to pay.

These debts can only be waived if:

• •  There is a proven administrative error or
• •  There are extreme special circumstances.  Special Circumstances are things like severe financial hardship, poor health, high medical costs.

Be persistent in seeking waiver of your debt. It may be useful to ask doctors, counsellors or community caseworkers to provide reports to help explain your circumstances.   Usually, you will need to try more than once to get Centrelink to waive the debt.  If they refuse, you can appeal that decision.

Or

•  Negotiate a payment plan

You can ask Centrelink for a payment plan that you can afford to pay.  This would be an amount each fortnight, or month that you pay off the debt over time.

You can talk to a financial counsellor or get legal advice to help you deal with Centrelink.

If you don’t pay, as well as the usual enforcement action Centrelink can take up to 15% of your pension or benefit to repay a debt.

If you think a Centrelink decision is wrong you have the right to appeal against it.   Appealing is easy and free.  It is best to lodge an appeal in writing and you should keep a copy of your appeal letter. However, you can also lodge an appeal over the telephone by telling Centrelink/FAO that you are not happy with its decision and that you would like to appeal to an Authorised Review Officer (ARO).  The ARO is a senior officer in Centrelink who has the power to change the original decision. Many people are successful at this level.

If you think the ARO decision is wrong you can appeal to the Social Security Appeals Tribunal (SSAT). The SSAT is independent of Centrelink.  You have further appeal rights to the Administrative Appeals Tribunal and the Federal Court. Time limits apply. You should get legal advice about appeals after the ARO decision.

The Child Support Agency (CSA) administers Australia’s Child Support Scheme.

Child support obligations are largely based on your income.  If you income changes, for example because you lose your job or your hours of work are restricted, it’s important to contact CSA quickly.  This way, you will be paying the right amount of child support.

You can request that the CSA use an estimated adjusted taxable income to calculate your child support payment where your circumstances have changed and your income is less if:

• •  your child support payments are based on a tax return or advice to CSA of your adjusted taxable income for the year, and
• •  your current adjusted taxable income is at least 15% less than the income used in the assessment, or
• •  you lodged an estimate for the current period more than two months ago because of changed circumstances, and the new estimate is for a different amount.

For more information about your options, including how to lodge an estimate contact the Child Support Agency.

If you are in arrears with your child support payments, you should contact the CSA and try to make an arrangement to repay them. They may accept an amount on top of what you are already paying to clear the arrears over an extended period of time. If your circumstances change you should tell the CSA immediately.

If you don’t pay your child support, the CSA can collect it direct from your wages or Centrelink payment without a court order.  They can also withhold your tax refund.  In addition, they can also use all the ordinary ways to enforce a debt.

It is also worth noting that child support payments and arrears are not wiped out by bankruptcy.

If  you are having difficulty meeting the payments on your car loan, your first step should be to check your loan agreement to see if the car is secured or not under the loan.

Most loans for cars are secured loans.  This means that the lender can take the car if you don’t pay the loan. This process can and does happen very quickly.

If the car is not security for the loan, your lender cannot take it unless they have a court order.

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The first thing you need to do is to find out whether your car is security for your loan.  Don’t assume it is, because sometimes it’s not.  To find out whether it is security for your loan, you can check the  national register - this is called the Personal Properties Securities Register.  Go to: http://www.ppsr.gov.au/Pages/ppsr.aspx.

You can also ask your lender for information about the loan - see next.

You can also ask your lender for information about your loan.  If you are not sure of how much is still owing on the loan, it is important that you do this as the lender cannot repossess without a court order if you have paid more than 75% of the loan and there is now less than $10,000 owing.

When you are having trouble paying your car loan, you need to make a realistic assessment of your financial situation.  In some cases, your problems will be temporary and, with a bit of an adjustment, you can get your loan back on track.

In other cases, selling your car will be the best option.  You should also prioritise your debts and then you will be able to draw up a debt management plan and know how much you can realistically afford. You can talk to a financial counsellor about this.

Another option available is to sell your car.  This option might be appropriate for you if you:

• •  Can no longer make any payments,
• •  Don’t need your car for work, or
• •  Can use a less expensive form of travel (cheaper car, public transport or bicycle).

When you sell your car, you have certain notification obligations.

• •  You must tell the person buying the car that it is under finance.
• •  You must tell your lender that you intend to sell the car.  When a sale price is negotiated, tell your lender.  If your lender is happy with the arrangement, ask them to confirm this in writing and also how they would like payment made to them.

Remember, if the sale price is under what you owe the lender, then you will be liable for the remainder of the loan.

You can also hand over your car voluntarily.  If you are handing over the car, it’s a good idea to take a photo of the car so you have proof of the condition it was in.  You should also do your own checking on the value of the car.  Your lender will then sell the car and if the sale price is under what you owe your lender, then you will be liable for the remainder of the loan.

If you are in arrears with your car payments, contact your lender as soon as you can and ask to speak with their financial hardship department. Tell your lender that you are experiencing financial hardship. Try to negotiate a payment arrangement that you can afford.  In most cases, and depending on the extent of your arrears, your lender may have a legal obligation to try and enter into some form of repayment arrangement.  Ask your lender to confirm any arrangement or agreement in writing.

If you cannot work out an informal arrangement with your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can apply to External Dispute Resolution.

See the fact sheet on court action (under "legal action").

If you have a loan for commercial or business purposes, you do not have the same legal protection as for a loan for personal reasons.  This means it can be more difficult to negotiate a change to the loan if you are facing financial hardship.

If you are struggling to meet your commercial loan payments, you should contact the other party to the contract and try to negotiate some form of payment scheme.  For example, you could :

• * Suggest a temporary or permanent change to your loan payment agreement, or
• *  Ask for a temporary stop on payments until you get back on your feet.

If you do come to an agreement, get it in writing and try and maintain the agreement.

It is important to try and stick to the agreement, as the consequences of not fulfilling a contractual obligation may be serious.

If you are unable to enter into a satisfactory repayment arrangement, you should seek legal advice as soon as possible. Many of the free legal advice services are not able to advise on commercial loans, so you will need to see a private solicitor.  You could also find out what help is available for small business in your state or territory.

• See the Fact Sheet on court action (under "legal action").

Personal credit cards provide a convenient and widely accepted way to pay for general and household expenses. Some of their features, however, may lead you into debt, particularly when your income is reduced and you are adjusting to changed financial circumstances.

Many people may think of getting a second credit card when they are already struggling to make payments on the first. This is a serious debt trap. If you use one card to make payments on another or to keep making purchases beyond your means, your debt will spiral out of control.

You should contact your bank or financial institution to ask for assistance with managing your credit card debt. Available options include requesting a lower credit limit or cancelling the card. Ultimately, though, you need to take control of your spending and avoid using your credit card to buy goods and services that you simply cannot afford. Because of the complex nature of credit card debt and the high levels of interest and charges, you should talk to a  financial counsellor if managing your credit card debt becomes an ongoing problem.

Credit cards allow you to spend money you don’t necessarily have, and in this way are very dangerous for people with limited income.  Credit card interest is usually the highest rate of interest for any type of mainstream loan. The only way to avoid the high interest is to stop using your credit card for cash advances and to pay the whole balance within the interest-free period.

If you have a credit card and only pay the minimum monthly payment you’ll end up in debt. If you don’t make the minimum monthly repayment off your credit card, you’ll have to pay extra charges and interest on top of your credit card balance. This will be so even if you don’t use the card for new purchases. A late payment fee may also be added for payments after the due date.

When you are having trouble paying your credit card, you need to make a realistic assessment of your financial situation.  In some cases, your problems will be temporary and, with a bit of an adjustment, you can get back on track.  Credit card debt attracts a high rate of interest and you should bear this in mind when you are prioritising your debts (see fact sheet under "dealing with debt").

If your credit card is being paid by a direct debit from your bank account, it may be best to cancel the direct debit. The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account. (See fact sheet on direct debits on this page.)

If you are in arrears with your credit card payments, contact your lender as soon as you can and ask to speak to their financial hardship department. In most cases and depending on the extent of your arrears, the credit provider or finance company may have a legal obligation to try and enter into some form of repayment arrangement.  You should:

• •  Tell your lender that you are experiencing financial hardship
• •  Try to negotiate a payment arrangement that you can afford
• •   Specifically ask (as part of your negotiations) that they agree to stop charging  interest, and
• •  Ensure that whatever arrangement you eventually reach is put in writing.

Remember, if you are successful in coming to some arrangement it means that your payments will be reduced, but the overall time to pay will take longer.  That means the overall cost of a loan may be greater.  Your bank may cancel your access to additional credit immediately if they learn about your changed circumstances. Therefore, you need to be prepared to stop using your card if you request a hardship variation. You’ll still have to pay off your debt even if your lender cancels your card.

If you cannot work out an informal arrangementwith your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can apply to External Dispute Resolution.

See the fact sheet on court action (under dealing with debt).

If you’ve applied for a loan, signed up for a gas, electricity or phone service or been at least 60 days late paying a bill during the past five years, it’s likely that a credit-reporting agency has a credit report in your name.

Credit providers use the information in your credit report to work out whether to give you credit. If your record reveals a poor history of debt payment, they’ll consider you a high credit risk. They might refuse you credit, or make you pay higher interest.

Your credit report contains:

Your personal details such as your name, date of birth, current and previous addresses, drivers’ licence number and employer details

Information about any applications you have made for credit (including mobile phones and gas and electricity accounts opened) during the past five years

Debts you hadn’t paid 60 days after the due date, and

Details about any court orders against you, including bankruptcy orders.

Details about credit applications and unpaid debts are kept on your file for five years. Details about serious credit infringements, such as a payment default coupled with a failure to provide a creditor with your current contact details, are kept for seven years.

Checking your credit report is important.  Wrong information in a credit report can stop you getting a loan or mean that you are charged a higher interest  rate if you are viewed as a credit risk.  You need to be aware that contact details you give to the credit reporting agency will be passed on to creditors.

If you can wait 10 days, it won’t cost you anything to get a copy of the report. If you need to see it faster, there may be a charge.

You can get a copy of your credit report from these credit reporting agencies:

Mycreditfile.com.au   (Veda Advantage)

Dun and Bradstreet

Tasmanian Collection Agency

Check their websites for current information about what you need to provide to get a copy of your report.

When you get your credit report, here are some possible problems to check for:

Your name or date of birth might be incorrect

Your address may need updating

A debt might be listed twice or the amount might be wrong

You might have missed one repayment on your loan but were never 60 days in default.

If you don’t agree with what’s in your credit report, you can ask to have it changed. Wrong listings should be changed for free. However, you can’t make changes to your credit report unless a listing is inaccurate or out of date.

Follow these steps to correct a wrong listing.

Step 1 - Contact the credit reporting agency
They may be able to fix small errors straight away or help you take steps to make a change. They may also offer to contact credit providers for you.

Step 2 - Talk with your credit provider
Contact your credit provider and explain why the listing is misleading or wrong. If they don’t fix the problem, go directly to your credit provider’s external dispute resolution scheme. This will be either the Financial Ombudsman Service or the Credit Ombudsman Service Ltd. Both schemes can be contacted on 1300 780 808.

Step 3 - Contact the Privacy Commissioner

If you are not able to sort out the problem by independent dispute resolution, contact the Office of the Privacy Commissioner. You have 12 months from the date you become aware of the problem to file a complaint. If the wrong listing has caused you financial loss, include this in your complaint.

A financial counsellor may also be help you with any of these steps if you experience problems.

Be very, very wary of ‘credit repair’ or 'debt solution' companies that claim they can ‘improve’ your credit rating or remove defaults. Many of these companies charge fees for services that credit reporting agencies provide for free. In most cases, default listings and other information about your credit history cannot be removed from a report unless it is proven to be wrong. (See also "How do you correct your credit report" above.)

Don’t search for credit reporting agencies over the internet, as you may find fake sites offering ‘free credit reports’ that are really out to scam you. If you want to contact a credit reporting agency online, type its website address in the address bar of your web browser.

If a business offers you a free credit report, they shouldn’t need your credit card details. Don’t provide these unless you understand why the agency is asking for them.

Never follow an email link offering a free credit report, or respond to an unsolicited email offering a free credit report – delete it. It is likely to be a scam, trying to trick you into giving out your personal information.

Australia's credit reporting system is changing. Australia is moving from a 'negative' reporting system to a 'positive' credit reporting system.

With positive credit reporting, lenders and other credit providers  collect a lot more information, including whether you made each loan repayment on time. Lenders starting collecting repayment history information in December 2013. This information will be recorded in credit files in March 2014.

People who pay on time will have a good credit rating. But making late payments might make it harder to get credit in the future. It could even mean you'll pay a higher interest rate to borrow money.

If you think that you won't be able to make a loan repayment or pay a bill on time, right now, speak to your lender. This will help to protect your credit file.

If you are worried about your credit rating or think there is a problem with the listed information, you don't need to pay a 'credit repair' or 'credit fix' company to fix it. They will just charge you money for something you can do yourself.

Remember you can get a free copy of your credit report once a year, or if you are refused credit because of something in your credit report (see information above).

Sometimes you will find you have a debt for goods or services.  This occurs more often with services, where someone will do the work for you before you pay them, for example medical practitioners, accountants, vets, or tradesmen and household repair services.

If you dispute that you are liable for the debt, for example because the services were not performed as agreed, you should get legal advice about what to do.

When you are having trouble paying your debts, you need to make a realistic assessment of your financial situation and prioritise your debts (see the "Prioritise your Debts" fact sheet.

If your accounts for goods or services are being paid by a direct debit from your bank account, it may be best to cancel the direct debit (see the next topic in this series).

The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account.

If you cancel a direct debit, you'll need to make sure that you pay the account in a different way.

See the Fact Sheet about direct debits on this page for more information.

If you are struggling to pay off one or more of these debts you should contact the person or organisation you have the debt with.  Tell them you are having difficulties paying off the debt or making payments. They may be willing to negotiate a payment plan that you can afford or they might give you extra time to pay your debt until your financial position improves. If you come to an agreement, ask them to acknowledge the agreement in writing.

See the Fact Sheet on court action.

A direct debit is when you allow someone to take money from your bank account on a regular basis to pay for goods or services. Payments by credit card can also be made by direct debit.

Traditionally direct debits were set up by filling in a form that was sent to your bank telling them to deduct money.  But now, direct debits are often set up online or over the phone.  With a direct debit in place, money will be taken from your account until you cancel the direct debit.

A direct debit can be:

for a fixed amount, for example $100 per month to repay a loan, or

for a variable amount, for example the cost of your phone bill each month

It can be set up to occur on the same date each month or on some other regular basis, for example weekly or fortnightly.

Direct debits can be a good way to help you manage your money and a convenient way to pay your bills.  But there are some disadvantages:

You have to watch the balance of your account to make sure there is enough money to cover the amount being deducted. This is harder when the amount being deducted varies. If you have trouble doing this then you should consider other payment options.

It can be very costly if you do not have enough money in your account to cover a direct debit. If the direct debit is not processed because of insufficient funds, you may have a dishonour fee to pay.  If it is processed and overdraws your account, there will also be fees to pay.

Mistakes can happen, so you need to be alert and check your statements to make sure the amounts are being debited correctly

It is more difficult to dispute a payment once it has already been taken from your account.

Before agreeing to a direct debit ask yourself:

Do you trust the service provider you are dealing with? Be especially wary if you feel like you are being pressured into setting up a direct debit

Do you know how to cancel the direct debit if you decide you don’t need it anymore?

If your income drops, you should consider cancelling all your direct debits unless you can keep sufficient money in your bank account to adequately meet the payments. You’ll still have to pay these debts, but you will have taken control over who, how, and when you make payments.

Banks and businesses that encourage payment by direct debit may initially tell you that you cannot stop a direct debit. You can – it’s your money and it’s your bank account. In fact, businesses that offer or require direct debit payments must have a process to assist you to cancel a direct debit arrangement.

But, be careful if making payments by direct debit is a basic condition of your contract. You may be breaking the contract if you cancel a direct debit when you have signed up for a minimum term, so you should seek legal advice  if you think this applies to you.

You may be able to cancel some direct debits on line.

Cancelling a direct debit from from your savings or cheque account

Write to your bank and instruct them to cancel your direct debit: see sample letter Instruction to cancel a direct debit authorisation from savings or cheque account.  You can make the cancellation immediate or set a future date for cancellation.   You should also send a copy of this letter to the business that has been getting paid from the direct debit.

Cancelling a direct debit from from your credit card

Write to the business, instructing them to cancel the arrangement: see sample letter Instruction to trader to cancel a direct debit authorisation from credit account. If the debits continue you can then show the letter of cancellation to your bank and ask that the debit be reversed as it is unauthorised.  Sometimes you may be able to cancel a credit card direct debit on line.

Keep copies of all letters you write or receive and copies of all your bank statements and accounts showing the direct

Your bank or financial institution must comply with your request to cancel a direct debit.  However, you should check your statements to make sure.  You may be entitled to have any transactions or fees debited against your instructions refunded.  If your bank fails to cancel the direct debit according to your instructions, you may take the matter to the relevant external dispute resolution scheme.

Centrepay is a free direct bill-paying service offered to customers receiving payments from Centrelink. Through Centrepay you can choose to pay bills by having a regular amount deducted from your Centrelink payment.

Fines are different to other debts, because they are penalties imposed by the government for breaking the law.  The consequences of not paying fines can be very serious, and in some cases can mean imprisonment and other sanctions like the loss of your drivers’ licence.  Fines are not wiped out by bankruptcy. You should view your fines as a priority debt and act quickly.

If you are having trouble paying off your fines, there are options that may be available to help you pay them off.  The systems for dealing with fines are different in each state and territory, so you should contact your local enforcement agency to find out what repayment options are available for you - search on google for "fines + your state".

You can also talk to a financial counsellor or get legal advice about your rights.

If you have an accumulated HECS-HELP debt (known as HECS debt until 2006) or Financial Supplement debt, you will be required to repay this debt through the tax system when your income is above the minimum repayment threshold for compulsory repayment.

If your circumstances change and your income falls below the threshold, you may be entitled to a refund of any additional amounts withheld for HELP or Financial Supplement debts throughout the financial year. This is determined once you lodge your income tax return for the relevant year.

You may apply to defer your compulsory repayment if either:

making your compulsory repayment would cause you serious hardship

there are other special reasons why you should not make a compulsory repayment.

or more information see Deferring Your Compulsory HELP, HECS or Financial Supplement Repayment.

Home loans are usually secured over your home.  This means that the lender can repossess your house if you don’t keep up the payments.  But most lenders are keen to work with customers who are having trouble paying a mortgage before things get to this stage.  If you are finding it difficult to meet the repayments on your mortgage, act as quickly as you can. You may feel reluctant or embarrassed, but don’t let this stop you from doing what you can to save your home. You can talk to a financial counsellor about your options.

When you are having trouble paying your mortgage, you need to make a realistic assessment of your financial situation.  In some cases, your problems will be temporary and, with a bit of an adjustment, you can get your mortgage back on track.  In other cases, selling your home will be the best option.  You should also prioritise your debts and then you will be able to draw up a debt management plan and know how much you can realistically afford to pay off each of your debts. You can talk to a financial counsellor about this.

See the Fact Sheets under "Dealing with Debt" for more information.

The thought of losing your home may make you feel anxious or distressed. However, it is better to take action and not avoid the situation. The most important thing to do is to make early contact with your lender, explain your circumstances and ask for hardship assistance.  By making early contact with your lender, you may avoid  missed mortgage payments being recorded as defaults on your credit report, and thereby protect your future access to credit.

You need to speak to somebody in the lender’s hardship department and should make a direct request to be connected to that department when you make your call. The hardship department staff should explain the options available to you for managing your mortgage payments in your current circumstances.

If you cannot work out an informal arrangement with your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can lodge a dispute with an independent External Dispute Resolution scheme.

It might be suggested to you that you should try and get early access to superannuation or refinance or consolidate your debts.  All of these options have significant disadvantages and you should talk to a financial counsellor about this.

It is also worth checking if there is a mortgage relief scheme in your location, that you may be able to access.

The MoneySmart website (from the Australian Government) has extensive information about how to deal with problems with your mortgage, including video interviews, that may be helpful.

In most cases a loan from a family member or a friend is done as an informal agreement. Quite often these types of loans are “hand shake” agreements where money is given and no documentation is entered into.  These loans are based on trust and a desire to help.  For this reason, they are quite often seen as morally the most important debt to repay.

If you find yourself struggling to repay a debt to a family member or friend, try and be up-front and let them know that you are having problems repaying.  Try not to make promises to repay amounts that you can’t afford.  Ask your family member or friend if you can pay smaller amounts, or if you can temporarily stop paying back the debt until you are in a better financial situation.  If you can come to an agreement, try and stick to that agreement. This may help to avoid stress on your relationship with that person and on your financial situation.

In most cases, a friend or family member who lent you the money can sue you to recover the debt.  This may be possible even for loans that are not backed up by any formal documentation.

f you are being sued, see the fact sheet on court action.

A payday loan or a short-term loan is an advance on your income.  Loans normally range from $100 to $1500 and are repaid over a couple of weeks.  A payday loan is normally used for a short-term cash need.

Payday loans attract various fees and charges that make them much more expensive than  credit from a bank or mainstream finance company.  If the loan is not paid back on time these fees and charges mean you could end up in a debt trap.

Your short-term lender cannot ask for your household goods as security for the loan and attempt to seize these items if you don’t pay. This is not allowed for any loans entered into from July 1 2010.

When you are having trouble paying your payday loan, you need to make a realistic assessment of your financial situation.  The very high cost of these loans is something you need to bear in mind when prioritising your debts.

If your payday loan is being paid by a direct debit from your bank account, it may be best to cancel the direct debit. The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account.

See the Fact Sheet on this page for information about direct debits.

Most short-term lenders are required to comply with consumer legislation and must consider flexible payment arrangements.  Credit providers that are not licensed are acting illegally.

As with any debt it is essential to let your lender know as soon as you are having financial problems and that you will not be able pay your loan as arranged.  Contact you lender by phone or in writing and let them know you are having trouble paying the loan.  It is then a matter of trying to negotiate a repayment plan that you can afford or set a date when you can make a payment to settle the payday loan.

If you are able to get an agreement with your lender, ask for them to acknowledge the agreement in writing.  Because of the high rate of interest, you should be wary of any arrangement that would extend the term of the loan.

If you cannot work out an informal arrangement with your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can lodge a dispute with an External Dispute Resolution scheme.

See the factsheet on court action.

Personal loans from banks and financial institutions are unsecured loans, taken out for personal reasons and not for business related or investment reasons. If you fail to make your repayments on an unsecured loan, your property cannot be seized unless your lender gets a court order.

Your lender is required to consider your request for flexible payment arrangements if you are experiencing hardship. You should contact them early, inform them about your changed circumstances, and ask how they can assist you to find an affordable way to manage your repayments.

When you are having trouble paying your personal loan, you need to make a realistic assessment of your financial situation.  Make sure you know the interest rate on your loan and bear this in mind when you are prioritising your debts.

If your personal loan is being paid by a direct debit from your bank account, it may be best to cancel the direct debit. The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account.

See the Fact Sheet on this page for information about direct debits.

You have a degree of protection as a consumer along with a range of options for how you might manage your store card debt. It’s important that you act early, as soon as you realise you will not be able to pay, and contact the store card lender with a request for flexible payment arrangements.

If you cannot work out an informal arrangement with your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can lodge a dispute with an External Dispute Resolution scheme.

See the fact sheet on court action.

If you’re experiencing financial difficulty and can’t pay your rates, you should inform your council. Most councils will have a hardship policy.  You can check your council’s website to find out about its hardship policy before trying to negotiate with them.  If you don’t pay your rates, the council can sue you and take enforcement action.  Councils are generally reluctant to ‘sell you up’, but this will depend on the amount owing and whether they think you will work with them to make repayments.   Therefore it’s preferable to act quickly and advise your local council, and keep them updated on your situation.

If you are receiving a Centrelink benefit check you are getting the concession you are entitled to. The concession schemes are different in different parts of Australia.  Your council should have current information about their scheme.

You may be able to negotiate to pay any outstanding rates by installments over an agreed period.  Make sure you only commit to a realistic payment.  Keep in mind that you will be required to pay ongoing annual rates as well as the arrears.

In some places, it may be possible to negotiate to defer your rate payments, or even have the rates waived.  Your council should have information about how they approach financial hardship.

As an alternative, the council may be happy to negotiate putting a caveat on your property to protect their interest and collect the debt when the property is eventually sold.  A caveat is a written warning to anyone who checks the title of the property that the local council has an interest in it.

You can also talk to a financial counsellor about your options.

If you cannot keep up your rent payments you are considered to be in ‘rent arrears’. If you find yourself in this situation you should inform your landlord or real estate agent about your difficulty and try to negotiate a repayment plan.

When you are in rent arrears you have a number of options available to help you stay on in your rented home, however you need to act quickly and keep in regular contact with your landlord or real estate agent.

Some states also have a  tenants' union or tenancy advice service or government agency that can provide information and/or advice.

If you are experiencing difficulty paying your rent, make sure you contact your lessor or real estate agent as soon as possible.  Explain your circumstances and ask for consideration.  Be careful not to offer to pay more than you can afford.  Be sure to put the offer in writing and keep a copy for yourself.  Even if your landlord or real estate agent rejects your offer, you can use the letter as evidence that you tried to resolve the matter.

Check that you’re receiving your full entitlement from Centrelink including rent assistance.Rent assistance payments top up your income to help you pay rent above a set cost. They’re not intended to pay all of your rent, but to make rent more affordable for low-income earners.  Remember if you receive Centrelink payments you may be able to arrange to have your rent payments taken from your Centrelink payment through Centrepay if your real estate agent is registered with Centrepay.

Centrelink advance payments are interest-free loans available to recipients of Centrelink benefits and available once every 12 months.  You may be eligible for a Centrelink advance payment to cover your rent arrears. The advance can be up to $500 (up to $1000 for pensioners), which you repay by fixed deductions from your fortnightly Centrelink payment.  If you use a Centrelink advance payment to pay your overdue rent, you must then be able to afford current rent contributions and the fortnightly repayments of the advanced payment loan. This means operating on a reduced income in the future.

See the fact sheet on emergency assistance.

The law is different in different parts of Australia, but if you have a fixed-term lease and you want to move out of your rented home before the end of the fixed-term, you may be able to break your lease agreement in one of the following ways:

Agreement with the lessor

Hardship grounds

If the landlord is in breach of the agreement

Find another tenant to take your place.

School expenses (fees, uniforms, books, sports and camp fees) can cause a lot of stress in times of reduced income. This is particularly so if you are paying private school fees. Decisions about your children’s education involve a lot of emotion. They can cause you severe stress if you wish to minimise the impact of your financial hardship on your children.

When you are having trouble paying your debts, you need to make a realistic assessment of your financial situation and prioritise your debts.  If you cannot afford the school expenses and you don’t do anything about the arrears, the school may take you to court. Depending on your circumstances, unpaid school debts could result in serious consequences including losing your house.

The best option is to contact the school as soon as possible when you are in financial trouble.  Ask to speak to the principal or school bursar/registrar (school financial manager) and tell them you are having difficulty paying.  When talking to the school there are many options you may want to consider.

If the school has a hardship policy, try and negotiate a payment plan that you can afford and the school accepts.  If you reach an agreement, ask the school to put this in writing.

Check to see if the school has a relief scheme for books and clothing expenses.

In most States and Territories there is some form of Student Assistance Scheme that can help families on a low income. Once again, check with your school about the availability and eligibility for such a scheme.

In some cases you might be able to negotiate for the debt to be waived completely (that is, they let you off paying) depending on the circumstances.  A school may waive or reduce the fees/debt if you have had a long association with the school or if your child brings some academic, sporting or other curricular prestige to the school.

You might be able to ask the school if you can perform some professional or other service for the school so they can reduce or waive the fees or debt.

If your school expenses are being paid by a direct debit from your bank account, it may be best to cancel the direct debit. The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account.

See the Fact Sheet on direct debits on this page for more information.

See the fact sheet on court action.

Store cards offer you credit up to an agreed limit but the interest rate on these cards is usually high compared to other forms of credit.  If you cannot afford to pay your store card by the due date, you can contact the store card lender (using the details that appear on your statement), explain your circumstances, and request a hardship variation.  The lender may agree (but is not obliged) to offer an affordable payment plan if your circumstances have changed, such as by losing your job and income.

If you have a store loan of the type “buy now and pay nothing for a period of up to 2-3 years”, you’ll find these loans can become very expensive if you cannot pay the entire balance within the interest free period. Making the minimum monthly payment may not be enough to pay off the loan within the interest free period.  If you still owe money when the interest free period expires, you’ll usually have to pay interest from the date you purchased the goods. High rates of interest apply to these accounts and, with backdated interest, your debt is more than likely to be substantially higher than you expected.

When you are having trouble paying your store card, you need to make a realistic assessment of your financial situation.  The prospect of having to pay back-dated interest on an “interest free” loan is something you need to bear this in mind when you are prioritising your debts.

If your store card is being paid by a direct debit from your bank account, it may be best to cancel the direct debit.  The advantage of stopping direct debits is that it can help you to have more control over how much and when you make payments.  Also, if you are going through a tight financial time you may have insufficient funds to cover the direct debit amount, and overdrawing your savings account may add extra cost to your account.

See the Fact Sheet on this page about direct debits for more information.

You have a degree of protection as a consumer along with a range of options for how you might manage your store card debt. It’s important that you act early, as soon as you realise you will not be able to pay, and contact the store card lender with a request for flexible payment arrangements.  If you cannot work out an informal arrangement with your lender, you can formally ask for a hardship variation.  If your lender will not agree to a hardship variation that you think is reasonable, you can lodge a dispute with an External Dispute Resolution scheme.

See the fact sheet on court action.

If you are having trouble paying your tax debt due to financial difficulty, you should contact the Tax Office.

The Tax Office has an area dedicated to assisting people who face serious hardship and they look at the particular circumstances of each case. They have a range of options available, depending on your situation, including longer-term payment arrangements, general interest charge remission and, in some circumstances, release from some or all of your tax debt.

The Tax Office considers you to be in “serious hardship” when payment of the debt would leave you unable to provide food, accommodation, clothing, medical treatment, education or other necessities for yourself or your family, or other people for whom you are responsible.

Under tax law, you can apply for release from certain taxation debts, including income tax, withholding tax, and Medicare levies and surcharges. Release from penalties and charges associated with the outstanding debts may also be granted.  If the Tax office refuses your application for release, you may apply to have the decision reviewed through the Administrative Appeals Tribunal. You should seek legal advice if you wish to pursue the matter in this way.

Home phone, mobile phone and internet services are usually billed monthly and, when your income is reduced, you may find it a struggle to pay them on time. But these are important tools today, especially if you are looking for work. So you may need to find a way to make these bills and debts affordable, if possible, in your current circumstances.  Phone and internet service providers are obliged to help people in financial hardship.  Most will allow you extra time to pay your account if you let them know about your changed circumstances.

All Australians have the right to  reasonable access to a standard home telephone service or pay phone. (Note there is no right to access a mobile phone service under this requirement).  To meet this responsibility, phone and internet service providers have hardship programs.

If you can’t pay your bill because of financial hardship, your home phone service provider can only disconnect your service after they have done all of the following:

Advised you that they may disconnect your service if you don’t pay; and

Discussed your repayment options, and the services of financial counsellors and consumer advocates for managing debt; and

Given you at least seven days notice of their intention to disconnect your service; and

Advised you in writing that they plan to disconnect your service; and.

Informed you of the earliest date upon which disconnection will occur.

If any of these requirements have not been satisfied and you are disconnected you can lodge a complaint with your service provider and the Telecommunications Industry Ombudsman (TIO)  if you provider is a member.

If you are disconnected, you usually have to pay a reconnection fee as well as the outstanding debt to restore your service.  If you are receiving Centrelink benefits, you can ask for the reconnection fee to be waived.

If there’s a home phone and other mobile phones in your household, you may be able to reduce your expenses by cancelling some service contracts and sharing the costs for the services you retain. But be careful because there are usually cancellation costs.

You can also use phones services more carefully – perhaps by using text messaging or asking people to call you.  Pre-paid services may also help you to manage your phone cost.

For difficulty paying mobile phone bills, contact your service provider, explain the reason for your financial difficulty, and ask to speak to the hardship department. When you are speaking to their hardship specialists, ask about how they can make their services more affordable in your current circumstances.

Your phone service provider may offer you one or more of the following arrangements to help make your bills more affordable:

Changing your billing cycle from monthly to fortnightly

Offering an installment payment plan for outstanding bills

Agreeing to wait a specified time for a payment

Restricting your access to some more costly services

Restricting your service to incoming calls only (Note emergency services and the service provider’s enquiry line are not restricted under this arrangement)

Check that you are receiving a concession rate on your home phone bill by registering your Health Care Card or Pensioner Concession details with your service provider.

If you’re having difficulty paying Internet bills, contact your Internet service provider and ask for a payment plan. Your provider may be willing to offer a payment plan, but you’ll have to pay your current bills as well as arrears under any payment plan.

You might also reduce your Internet expenses by:

Changing to a more affordable plan; or

Accessing the Internet at your library, which is usually a free service; or

Entering a pre-pay agreement for your Internet access.

Your rights in relation to your Pay TV account are limited to the terms and conditions in your Pay TV contract. You can contact your Pay TV service provider, explain you are in financial difficulty, and ask for a more affordable payment arrangement. Contacting them as soon as possible to discuss possible payment options, will give you a greater chance of consideration.

“Bundling” refers to the provision by a single provider of multiple telecommunications services – such as home phone, mobile phone, Internet and Pay-TV – and the method of billing for these services.  Offers of bundling typically promise overall discounts or other benefits if a number of the services are combined on a single billing account. The discounts often work in conjunction with existing discount schemes, and understanding exactly what is and is not included in the various discount offers can be confusing.

If you have bundled your communications services you may find that changing plans for any individual service (such as your mobile phone) may incur costs or other changes for your home phone of internet service because a bundling discount no longer applies.

If a door-to-door representative convinced you to sign a phone, Internet and Pay-TV contract in your home you may be able to cancel the contract, either:

During the 10-day “cooling off” period that applies for all contracts entered into in a home, or

If you have been misled by a high-pressure sales pitch that is not true.

The representative may have claimed their service will save you money. However, any discount claim by the new service provider may be offset if you are required to pay cancellation fees to your old service provider.

If you can’t afford a contract you signed in your home for phone, internet or Pay TV services, and the service provider refuses to cancel the service, you should contact the Telecommunications Industry Ombudsman (TIO) seek legal advice or contact a financial counsellor.

If you have been unsuccessful at trying to resolve a dispute with a telephone service provider over billing, financial hardship or some other issue, or you are unsatisfied with the outcome of a dispute, you can take your complaint to the Telecommunications Industry Ombudsman (TIO)  for resolution if you service provider is a member. The TIO is unable to consider disputes in relation to your Pay TV service.

While there are some differences across Australia, utility companies will usually have hardship programs to help people having trouble paying their bills for electricity, water and gas.  Don’t use your credit card to pay off your utility bills as this will only add to your debt.

Your utility company will generally offer you a flexible arrangement and won’t commence debt recovery action or disconnect your service so long as you:

contact them early

explain your circumstances to them and

if possible pay something off your bills/debt.

As well as being eligible for your utility company’s hardship scheme, you may also be entitled to concession rates, a utility grant or special services to help you manage your utility costs, particularly if you receive Centrelink payments.

The first thing you should do is to contact your provider.  In most States and Territories you will find a lot of support.  In many cases, your provider is legally required to help you. You should contact your provider by phone or in writing.  You need to:

Explain your situation, and

Ask for a flexible bill paying arrangement or help from their hardship department.

If your Provider has threatened to disconnect your service, you need to:

Make sure you contact them and tell them you are in financial hardship;

Ask them to not disconnect you.

If you can come to an agreement, ask them to confirm that agreement in writing .You then must make sure you (and they) keep to that agreement.

If you have any problems negotiating with your water, electricity or gas provider, or if you any other billing concerns, ask to speak to their hardship department or a ‘team leader’.  If still unhappy contact the appropriate State or Territory‘s utilities Ombudsman Scheme.

If you have not been able to negotiate an agreement with your provider you may want to talk to a financial counsellor or get legal advice.

There are a number of State, Territory or Federal-based utility relief schemes that are available to people who are struggling with paying their bills.  While each scheme has its own eligibility requirements, they are generally only available to people who receive a Centrelink payment, or hold a Health Care or Concession Card.  To find out what utility relief schemes you may be eligible for, check on the back of your utility account, with your utility supplier directly or ring and speak to a financial counsellor.

If you are being paid a Centrelink benefit or pension or hold a Health Care Card or Concession Card make sure you take advantage of any eligible discounts/concessions displayed on your electricity, water or gas bill.

If a door-to-door representative convinced you to sign a gas or electricity contract in your home you may be able to cancel the contract, either:

during the 10-day “cooling off” period that applies for all contracts entered in your home, or

if you have been misled by a high-pressure sales pitch that is not true.

The representative may have claimed their service will save you money. However, any discount claim by the new service provider may be offset if you are required to pay cancellation fees to your old service provider.

If you can’t afford a contract you signed in your home for gas or electricity supply, and the service provider refuses to cancel the service, you can contact the appropriate State or Territory‘s utilities Ombudsman Scheme, seek legal advice or talk to financial counsellor.

If you are experiencing financial difficulty you can ask your lender,

telephone/internet company, electricity, gas or water provider for

assistance to defer the payment or to make a payment arrangement.

These businesses all have a legal obligation to consider your request.

It is better to ask for assistance, than go into more debt by using your

credit card to pay bills.

Act early. You have more options if you let your provider know as

soon as possible that you are in financial difficulty. This will also mean that you might avoid late payment fees or a listing on your credit file.

If you’re calling from a mobile, ask the company to call you back.

Know what you can afford to pay. Sometimes people agree to

arrangements they can’t keep. Be realistic.

Be clear about what assistance you need to get back on track.

For example, are you asking for more time to pay or for reduced

payments for a period of time?

If you ring to request assistance, jot down some notes so you have a

record of the conversation. Record the name of the person you spoke

to, the date and time of the call and what was agreed (or not agreed).

Most suppliers have specialist hardship teams. If you feel like you’re

not getting anywhere, ask to be put through to this team.

If your provider won’t agree to help you, you can lodge a dispute with

an independent and free External Dispute Resolution Scheme (see the Fact Sheet on "disputes" under Legal Action).

Financial counsellors work in community organisations and their

services are free, independent and confidential. They can help with

advice about credit and debt issues, incuding negotiating payments.

Don’t be tempted to go to a budget service, credit repair agency

or debt negotiator. These businesses charge a lot of money for

something you can do yourself.

Every bank has a link to information about what to do if you’re in

financial difficulty on the home page of their websites.

Some banks have online application forms.

You can ask for any variation to your loan or credit card that will help you get back on track. The bank has 21 days to consider whether

they will agree (and they may ask you for more information).

For more information, see the fact sheet under Dealing with Debt,

called “Hardship Request - Credit”.

Some telecommunication companies allow you to request a payment extension using an automated telephone system.

Think about whether you should ask to go on a different plan. It may

be that your current plan isn’t working for you. Sensible suppliers will

allow you to change your contract.