What to do when you’re struggling to meet your repayments
Making ends meet can be really tough. When you also have debt repayments to squeeze out of your tight budget, sometimes the numbers just don’t add up.
Debt Repayments reality
- If you simply don’t have enough cash to make your debt repayments, what can you do?
- One thing is for sure. Burying your head in the sand isn’t going to make your debts go away. It’s important to be upfront, honest, and to be proactive.
Face the music
- If you’re not going to be able to make the next repayment on your credit card, loan or other debt, contact your credit provider as soon as possible.
- Don’t wait for them to start chasing you!
- You and your credit provider share a common goal. You both want your debt to be repaid.
- It’s in the interests of both parties to work together and reach a debt repayments solution.
What outcome should you aim for?
- Your debt isn’t going to go away. You’ll still need to repay it, but you can ask to adjust the terms.
- Contact your credit provider as soon as you can, and be honest. Let them know you are experiencing financial hardship, and tell them why.
- If your financial circumstance have changes since you got the loan and the change wasn’t your fault, such as you lost your job or you became ill and unable to do as many hours etc… your credit provider will most likely enter into negotiations with you over what you can now afford.
- They’ll work with you to determine what kind of adjustment repayment terms they may be able to offer. And this will be based on what they think you can afford.
Stick within your means
- Only agree to a revised repayment arrangement you can afford.
- If you do agree on revised repayments with your credit provider, stick to them!
- If for some reason you can’t pay the full amount, contact your credit provider and let them know ASAP. Don’t stop paying altogether as this will just add to your problems.
- It is very important when negotiating how much you can afford to pay that you are completely honest and show proof to back up your reduced income such as a Centrelink employee separation certificate, or medical certificate from your doctor.
- It is also important that if you have any new expenses since the time you got the loan that you tell the credit provider or they may only offer you an amount above what you can afford, which will make your situation even worse.
If they won’t budge
- Remember negotiations are not where the credit provider gets everything they want, and negotiations are not when you get everything you want. If you try to negotiate with your credit provider by setting an amount you think you can afford without giving them the opportunity to relook at your reduced income, then they are most likely not going to agree to your amount.
- If you can’t reach a revised agreement with your credit provider and you think they’re being unfair, you can make a complaint with the credit provider who is required to register their complaint with their Internal Dispute Resolution scheme.
- You may also at this point choose to contact a free financial counsellor on 1800 007 007 who can help you assess your position.
Want more info on your options?
This ‘Can’t pay your debts?’ factsheet from Moneysmart has some great info on the various options available to, and what your rights are.
We know it’s tough out there
At City Finance, we’re different to other lenders – we understand how tough it can be to make ends meet and are here to help. We take the time to get to know you, and focus on your unique situation to tailor a loan and repayments around you and your needs.
Whether you need new finance or want to discuss making changes to your existing arrangements, call us on 1300 34 62 62 or pop into your local branch today for a chat with our friendly staff, and together we’ll work on a solution to see you through.
This article is provided as a guide only and does not constitute financial advice. We encourage you to do your own research through the Australian Financial Security Authority and Moneysmart to reach a debt management solution that is appropriate for you.”