One of the beneficiaries of our 2011 Debt Relief Project was a 70-year-old woman who lived with her severely handicapped husband, for whom she was a carer and received a carer’s allowance. When the woman approached our service, her debt to a finance company was over $2000.
Last year’s Debt Relief Project called on local community workers to refer to us Centrelink clients in financial hardship. The call formed part of an innovative bulk debt negotiation scheme designed to negotiate debt relief on the clients’ behalf.
Instead of agencies or legal centres negotiating hardship cases or repayment plans on a case-by-case basis (which wastes everyone’s time), matters with a common creditor (eg finance companies, insurers or utility providers) were bundled and negotiated together.
The scheme had been trialled in metro areas and proved hugely successful, wiping millions of dollars of debts and relieving hardship from hundreds of people who struggled from week to week.
The scheme identified people who needed immediate financial relief through debt waiver and fast tracked a resolution, helping the creditor to wipe a bad debt and move on.
The scheme was free and Loddon Campaspe Community Legal Centre received no financial benefit.
The 70-year-old woman and her husband were dependent on Centrelink benefits. They rented a unit from a private landlord for $360 per fortnight. The woman got into difficulty purchasing necessities from a retailer that was agent for a finance company. The retailer sold the items using credit from the finance company.
The total debt owed by our client when she approached Loddon Campaspe CLC was over $2000. The monthly interest was more than $50 and the minimum repayment required by the finance company was $60 per month. The repayment amount was beyond the client’s capacity to pay and would have reduced the principal by only $7.50.
Our client was likely to be paying an onerous amount to the finance company for the rest of her life.
We put it to the finance company that in light of the client’s financial and personal circumstances, to continue the debt would be unconscionable. Upon provision of proof of the client’s circumstances the company waived the debt.
We had a number of clients owing 15 debts to this one finance company. Many of these clients had their debts waived or we negotiated a reasonable arrangement. Many clients with debts to other finance companies also benefited from the program. All up, we assisted 27 clients as part of this program.
Image: Abdulsalam Haykal
Please note: the above image is provided for illustrative purposes only and does not represent any person related to the matter referred to in this post.