Australian household and personal debt levels are some of the highest in the world so it’s not surprising that many of us face financial stress and difficulty managing debts at some stage of our lives. More than 2.5 million Australians live in households in financial distress, so if you’re struggling with debt, you’re not alone.

Don’t ignore the problem

Unless your debt problem is temporary and you have a solution, ignoring it is likely to make it worse. Sometimes the hardest thing to do is to admit that the problem exists and to seek help, but this is the fastest way of dealing with it and getting yourself back on track.

Make an appointment to see a financial counsellor. A financial counsellor is a qualified professional who can provide you with information, advice and advocacy if you are experiencing financial difficulty. It’s a free service that’s non-judgmental, independent and confidential. They will listen and provide emotional support. Financial counsellors do not sell products.

Financial counsellors are often based in community organisations, charities and local government agencies throughout Australia. If you are in debt or are unable to meet your ongoing expenses, a financial counsellor may be able to help you:

• Prioritise your debts and deal with your current crisis
• Negotiate with creditors
• Access dispute resolution services
• Develop a budget and put systems in place so you are less likely to fall into financial difficulty again in the future
• Access grants or concessions
• Understand your rights and access legal help if necessary.

You can find a financial counsellor near you for a face-to-face appointment by visiting the National Debt Helpline website, calling 1800 007 007, or contacting us for a referral.

Please note: Financial counsellors are not the same as financial planners or financial advisers, who provide financial planning and investment advice for people with money to invest.

If you are you behind on your bills, struggling with debt repayments or unable to cover basic living expenses, there are organisations that can help you manage a financial crisis.

Relief Trust Funds

Each of the Services, Army, Navy and Air Force, has a trust fund which can provide loans and grants to ADF members experiencing financial difficulty. ADF members who are suffering financial hardship due to physical or mental injuries, as a result of service, may also be eligible for assistance through the Bravery Trust.

To contact the appropriate source, go to:

• Army Relief Trust Fund, call (02) 6144 7857 or email AHQ.ARTF@defence.gov.au.
• Royal Australian Navy Relief Trust Fund or talk to your local RAN Ship or Establishment RANRTFO/PERSO.
• Royal Australian Air Force Welfare Trust Fund or call (02) 6128 7639.

Bravery Trust, call 1800 BRAVERY (1800 272 837) or email ask@braverytrust.org.au.

If you don’t have a budget, a budgeting tool can help you develop one. A budget will give you a clear picture of your income and expenses and allow you to identify any areas you could make savings. Make sure you include the minimum repayment amounts on all your debts when completing your budget. It might be helpful to list out debts in a debt summary.

If you already have a budget, make sure it’s up to date so you can quickly see whether you can realistically pay your debts without help.

Debt summary

Making a list of current debts and minimum repayments will help you get a clearer picture of where you’re at. Here’s an example of what your debt summary might look like:

If after completing your budget and debt summary you think you’ll have difficulty managing your debts, seek help immediately. Try not to default on your payments, talk to your credit providers to negotiate an affordable payment plan.

As soon as you are aware that you can’t pay a bill, contact the credit provider to inform them you are in ‘financial hardship’ and are finding it difficult to meet your repayment obligation. Ask them about adjusting your loan repayment or bill amount to something more manageable, larger bills can often be paid by instalments. This will only be a temporary measure but might give you a bit of breathing room to sort things out more permanently.

How credit providers can help

Your credit provider may be able to give you an extension of time to make the repayment, offer you a lower repayment, or a lower interest rate, for a set period of time, to help you get back on your feet. This is called a hardship variation. Make sure that you can afford to meet the repayment arrangement before you agree.

You may find the following MoneySmart resources useful:

• Get debt under control
• Problems paying bills and fines

If you’re finding it difficult to talk to credit providers, ask a financial counsellor for help.

Don’t panic and rush into a debt agreement. A debt agreement is a form of bankruptcy and could put your security clearance at risk. This could have a serious impact on your career in the ADF and future financial outcomes.

Don’t pay for help

There are many for-profit organisations, often calling themselves ‘debt solution compa-nies’, which offer to help people in financial difficulty. They may provide ‘debt consolida-tion loans’, ‘debt agreements’ or other services for which they will earn fees or commis-sions. Avoid them and choose a free financial counselling or a free legal service instead.

Debt consolidation or refinancing by rolling your existing debts into a single loan, can make managing your debts easier because you’ll only have a single debt to be repaid, but it can make your situation worse. You may end up paying a higher rate of interest that you are already paying, and if you don’t close existing credit accounts it can be tempting to use available credit the next time you find yourself short of cash.

If you are considering entering into a debt consolidation loan, debt agreement or any form of bankruptcy, always seek legal advice first. There are usually better options.

• Make a list of all your debts and repayment amounts.
• Review your budget.
• Talk to your credit providers to see if you can come to a manageable repayment arrangement.
• For help completing a budget or for a referral to a free financial counsellor, contact us; or
• Call the National Debt Helpline on 1800 007 007.
• Contact the relief trust fund for your service:
  • Army Relief Trust Fund on (02) 6144 7857 or email AHQ.ARTF@defence.gov.au.
  • Royal Australian Navy Relief Trust Fund via your local RAN Ship or Establishment RANRTFO/PERSO.
  • Royal Australian Air Force Welfare Trust Fund on (02) 6128 7639.