6 June 2013
Temporary financial difficulty has in the past led to accounts in default and years of restrictions to mainstream credit – but a consumer advocate says by acting early and taking advantage of new financial hardship laws, a bump in the road doesn’t have to mean you can’t borrow again.
CEO of MyCRA Credit Rating Repair, Graham Doessel says for those people suffering temporary financial problems, there is now a large incentive to talk to your bank.
“If you suddenly lose your job, fall ill, separate from your spouse or have a specific period of intense financial difficulty – you should know there are laws that may be able to help you through this difficult time. By putting your hand up early– before your accounts go into arrears – you could save your credit file,” Mr Doessel explains.
This comes after the Australian Bankers’ Association (ABA) have this week embraced new financial hardship laws designed to protect consumers during times of temporary financial hardship, committing to a financial hardship package around consumer awarenesss.
Steven Münchenberg, Chief Executive of the ABA, said in a statement to the media on Tuesday[i] : “Our research tells us that only one in four bank customers know that banks offer hardship assistance. We would like to change that.”
“If customers find themselves in financial difficulty, they need to take some action because money troubles don’t usually go away on their own. Don’t ignore the problem and talk to your bank as early as you can. Customers can also call an independent financial counsellor or ask your bank for a referral to an independent financial counsellor.”
Mr Doessel agrees consumers have largely not been aware. He says he has helped many clients in the past dispute credit listings issued during a time of financial hardship, but he hopes that due to the ABA and banks playing a more proactive role in education, this will no longer be as prevalent.
“In the past consumers have not been offered hardship variations with their bank, or they have not been aware they have a right to request one and have been defaulted – this locks them out of mainstream credit for five years,” he says.
“If consumers are largely aware of their rights – then then they will request a variation to their credit agreement early and can avoid the long term consequences for what is often a very temporary issue.”
He says the earlier consumers act, the better off they will be.
“If they are able to secure a hardship variation prior to their account going into arrears at all, they may also avoid having the new late payment history recorded against their name, which could impact credit worthiness,” he says.
Consumers experiencing temporary financial hardship should contact their bank and ask to speak with the Financial Hardship Variation division
“Using the specific words ‘financial hardship’ will help make it clear to the bank what you need. Ideally, act before you fall into arrears on your account – to save your credit file when you recover from this difficult time,” Mr Doessel says.
Graham Doessel CEO Ph 3124 7133
Lisa Brewster Media Relations firstname.lastname@example.org
MyCRA Credit Repair 246 Stafford Rd, STAFFORD Qld
MyCRA is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files. CEO of MyCRA Graham Doessel is a frequent consumer spokesperson for credit reporting issues and is a founding member of the Credit Repair Industry Association of Australasia.