Financial Hardship and Debt are not often talked about, but they’re critical issues facing many Australians.
According to the OECD, Australian household debt is at a level equivalent to 210% of the net disposable income of Australian households. This means that, on average, Australian households owe a total debt amount that is more than double the annual disposable income after taxes and other deductions.
In this episode of Property Insights, Mark Bouris sits down with Laurence Hugo, Director of Credit Mediation Services, to discuss financial hardship, and the role his company plays in helping businesses and consumers facing financial hardship.
Laurence explains how their specialised negotiators work to reduce outstanding debts to more manageable levels, whether it’s credit card debt or business loans. With over three decades of experience in banking and debt negotiation, Lawrence speaks about the emotional aspects of financial hardship and how it impacts people’s lives.
Key Takeaways:
- Credit Mediation Services work with consumer and business clients in financial hardship to negotiate and reduce various types of debts, including home loan, credit card, and business debts.
- You can seek assistance at different stages of financial distress, whether struggling with monthly expenses or near bankruptcy. Negotiators aim to improve their clients financial well-being and overall quality of life, by assessing the client’s financial situation and gathering evidence like income, expenditure, and payslips to negotiate with banks.
- Laurence talks about the emotional and utility aspects of money, and the need to identify the ‘pain point’ – the cause of the financial distress – so that appropriate exit strategies can be identified, pointing out that some clients may need a budgeting specialist, not a negotiator.
- Negotiators not only liaise with a bank’s hardship department but they can then escalate the matter as necessary to key decision makers within the bank who can bring greater experience to the decision. Negotiators will work to engage the empathy of the decision maker to overcome corporate banking indifference.
- Debt remediation is seeing a huge increase at the moment as interest rate hikes kick in, not only from consumers struggling with increased mortgage repayments but particularly from those with business debt inquiries.
- Laurence highlights the emotional burden money can impose and talks about how rewarding it can be to take away debt from those who are in difficult positions.
- Mark and Laurence discuss the positive changes in the debt collection industry, noting that there is a lot more leeway with the banks including hardship provisions, benefit of the doubt, and other legislation that encourages the lender to be more conscious of borrowers.
