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With the new credit reporting rules in place in Australia and the implications of having a black mark against your file for just being 5 days late in making a payment, whether it be credit card or utilities bills, will this have a devastating effect on the thousands who are already struggling financially?

There are already those single parents who are struggling due to having been placed onto the Lower Newstart Allowance (unemployment benefits) as opposed to PPS (Parenting Payment Single) when their youngest child turns 8 years old.

In my case, I already have established debt before the changes came in, so now even working I can't keep up with having bills paid on time every time.

If having a black mark against your name for 2 years for paying a bill just 5 days late, what are the implications? Would it push more and more people to apply for bankruptcy? What are the implications and options available to me and others in a similar situation to me?

  • Ahhhh, another great question dogpiled. Tracey, credit is natural, but recordkeeping may not be. Interest rates will be better priced, so black marks will increase rates, but as long as all creditors are satisfied, credit will be available. – user11865 Mar 17 '14 at 22:35
  • @Victor - I see your work (edit) to reopen. Can you link in to the rules the questions is referring to? I've not seen the details. – JTP - Apologise to Monica Mar 18 '14 at 11:57
  • I voted to reopen, I think the community has adopted this enough and will make this a good question. – MrChrister Mar 18 '14 at 14:01
  • @JoeTaxpayer - I have added some links for 'new credit reporting rules' and for 'PPS'. – Victor Mar 19 '14 at 10:42
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From my understanding by paying your bills more than 5 days late will not lead you into bankruptcy or stop you from getting a new loan in the future, however it may mean that lenders offer you credit at a higher interest rate. This of course would not help you as you are already struggling with your finances.

However, no matter how bad you think things might be for you financially, there are always things you can do to improve your situation.

Set a Budget

The first thing you must do is to set a budget. List down all sources of income you receive each month, including any allowances. Then list all your sources of expenses and spending. List all your bills such as rent, telephone, electricity, car maintenance, credit card and other loans. Keep a diary for a month for all your discretionary spending - including coffees, lunches, and other odd bits and ends.

You can also talk with your existing lenders and come to some agreement on reducing you interest rates on your debts and the repayments. But remember any reduction in repayments may increase your repayment period and the total interest you have to pay in the long term.

If you need help setting up your budget here are some links to resources you can download to help you get started:

Once you set up your budget you want your total income to be more than your total expenses. If it isn't you will be getting further and further behind each month.

Some things you can do are to increase your income - get a job/second job, sell some unwanted items, or start a small home business.

Some things you can do to reduce your expenses - make coffees and lunches at home before going out and buying these, pay off higher interest debts first, consolidate all your debts into a lower interest rate loan, reduce discretionary spending to an absolute minimum, cancel all unnecessary services, etc.

Debt Consolidation

In regards to a Debt Consolidation for your existing personal loans and credit cards into a single lower interest rate loan can be a good idea, but there are some pitfalls you should consider. Manly, if you are taking out a loan with a lower interest rate but a longer term to pay it off, you may end up paying less in monthly repayments but will end up paying more interest in the long run.

If you do take this course of action try to keep your term to no longer than your current debt's terms, and try to keep your repayments as high as possible to pay the debt off as soon as possible and reduce any interest you have to pay.

Again be wary of the fine print and read the PDS of any products you are thinking of getting. Refer to ASIC - Money Smart website for more valuable information you should consider before taking out any debt consolidation.

Assistance improving your skills and getting a higher paid job

If you are finding it hard to get a job, especially one that pays a bit more, look into your options of doing a course and improving your skills. There is plenty of assistance available for those wanting to improve their skills in order to improve their chances of getting a better job. Check out Centrelink's website for more information on Payments for students and trainees.

Other Action You Can Take

If you are finding that the repayments are really getting out of hand and no one will help you with any debt consolidation or reducing your interest rates on your debts, as a last resort you can apply for a Part 9 debt agreement. But be very careful as this is an alternative to bankruptcy, and like bankruptcy a debt agreement will appear on your credit file for seven years and your name will be listed on the National Personal Insolvency Index forever.

Further Assistance and Help

If you have trouble reading any PDS, or want further information or help regarding any issues I have raised or any other part of your financial situation you can contact Centrelink's Financial Information Service. They provide a free and confidential service that provides education and information on financial and lifestyle issues to all Australians. Learn how to manage your money so you can get out of your debt and can lead a much more comfortable and less stressful life into the future.

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