If you’re struggling financially right now, you’re not alone. One in three Australians are living paycheque to paycheque, and many more are searching for financial advice.
But how do you decide it’s time to get professional help?
It can be hard to know when it’s the right time to call in the experts. You may feel embarrassed, or you may simply not want to deal with your debt at all. It’s important to know that seeking help is nothing to be ashamed of.
It’s a sign of strength that you’re willing to address the issue, and the good news is there’s plenty of services available to help you get back on track.
How do you know it’s time to seek expert advice? Keep reading for tell-tale signs you should talk to a debt counsellor.
What Is Credit Counselling?
Before we begin, let’s explain what debt counselling is. In general, debt counselling is a form of support with managing your debt, budgeting, and saving. While many people might believe the myth that debt counselling is only for those who are struggling with extreme levels of debt, this isn’t the case.
Credit counselling is for anyone who wants to improve their credit rating and gain control over their money. With a variety of services designed to secure your long-term financial success, credit counselling helps you create a brighter tomorrow.
When to Consider Credit Counselling
When is it time to consider debt counselling for yourself? There is no one-size-fits-all situation when it’s time to seek help. Anyone who feels like they need guidance about their finances should look into debt counselling. If any of these situations below relates to you, it might be time to take action.
You’re considering bankruptcy
If you’re considering bankruptcy, you’ll definitely want to research all of your options before making any decisions. Bankruptcy can affect you for years to come, and there may be another solution that’s better for your situation.
Working with a debt counselor could be a way to find a better fit solution that doesn’t rely on drastic action like bankruptcy. It’s worth talking through your options with a professional who knows your situation and your goals.
You’re struggling to meet your monthly payments
If you can no longer make your credit card, mortgage, or personal loan repayments, it’s time to put a plan in place so you don’t fall behind. A debt counselor may be able to help with debt consolidation, mortgage refinancing and personal loan refinancing solutions to get you back on track.
Without a plan, you’re at risk of defaulting on your payments. Your lender could take stronger action against you, and your situation might spiral out of control. It’s time to find help as soon as you’re unable to make payments.
You’ve received a judgement/court action and you don’t know what to do
If a creditor has taken legal action and obtained a court order/judgement debt against you, it may be a good idea to get a debt counsellor on your side to stop the more serious actions a creditor can take with court action. You could face a garnishee order or the seizure of your possessions.
You can’t seem to break the payday lending cycle
Sometimes you get trapped in the payday lending cycle and it’s hard to get out on your own. It’s called the lending cycle for a reason! These are designed to be predatory, and the lender profits from your inability to pay your loan quickly.
A debt counsellor can help you break the cycle with a plan that works for your personal situation. From there, they can help you with a strategy for avoiding these schemes in the future as well.
Your house or car is in danger of being repossessed
If you’re looking to save your house or your car, it may be time to leave it to an expert to ensure your most prized possessions aren’t repossessed. Nobody wants to lose their housing or transportation, so don’t delay. There might be steps you can take.
What Solutions Will a Credit Counsellor Provide?
There are a number of solutions a credit counsellor provides. While it depends on your specific situation, common options are:
- Debt consolidation – Consolidate your debts into one single low-interest loan. Rather than having multiple monthly repayments, you’ll have one manageable monthly payment.
- Debt negotiation – Your credit counsellor will negotiate with your creditors directly to reduce your total debt, agreeing on a new payment plan that is manageable for you.
- Debt agreements – This solution allows you to make regular repayments based on what you can afford – not what is owed. It uses Part IX of the Bankruptcy Act and will freeze the outstanding balance of your debts and stop any further interest, fees or charges.
- Informal payment arrangement – This is similar to a debt agreement but isn’t considered an act of bankruptcy. It will freeze the interest on your debts and stop creditors from calling, and lets you pay back your debts with an affordable plan.
What Should I Be Prepared to Provide?
If you’ve decided it’s time to seek help from a credit counselor, you need to prepare a few things. The more information you can provide at your initial meeting, the better equipped your counselor will be to guide you towards the right next steps.
Bring the following to your meeting:
- Your income details
- A list of all your debts
- Copies of any loan agreements you have
- Documents related to outstanding bills
- Any court documents you’ve received
- Urgent letters regarding bills/debts
The more you bring, the better. Your goal is to provide as clear a picture as possible so your counselor can consider the best short-term and long-term plan. In addition, give some thought to your financial goals. Where do you see yourself in 5 years? In 10 years? Keep this in mind during your meeting.
Know When to Ask for Debt Counselling
There are a whole host of reasons to seek debt counselling. There are plenty of solutions to help you get back on track. If you’re feeling like your finances are out of control and you’re struggling to keep up, it may be a good time to seek professional help. Remember, you’re not alone.
If you think it’s time to get financial help, get in touch with our friendly team at 1300 368 322. We’re here to help and we’d be happy to help you find a solution that’s right for your needs and goals. We have over 15 years of experience helping Aussies just like you get back on their feet.