Financial counsellors urge people to seek assistance ahead of JobSeeker, loan deferrals coming to an end
During the worst recession Australia has seen in almost 100 years, you would think financial counsellors would be bombarded with calls.
You’d be wrong.
Despite the sharp economic downturn from the coronavirus pandemic, the phones are quiet.
Financial counselling services are trying to encourage people across the country, especially in Victoria, to get ahead of the ball and reach out for help before cuts to JobKeeper and JobSeeker take effect and moratoriums on evictions and rent deferrals end.
The Federal Government is considering extending the JobSeeker supplement into next year but has made no announcements.
The Salvation Army’s Moneycare team and the National Debt Helpline, managed by Financial Counselling Australia, have both told ABC News they are experiencing a decline in calls compared with last year.
Financial Counselling Australia director of community engagement Maura Angle said the trend was worrying.
“With JobSeeker and JobKeeper about to taper off, moratoriums on rental evictions ending, and the possibility of responsible lending practices diminishing, more people are likely to turn to credit,” Ms Angle said.
‘If it wasn’t for them I would probably be living on the street’
Turning to credit is something very familiar to Scott Futcher.
The 39-year-old needed help to sort out his rising debt for years but was too “stubborn” to reach out.
“I think I was too proud,” he said.
“I was just going to keep battling at it and was digging a bigger hole for myself.”
A casual worker, Mr Futcher receives a small amount of money from the Government to help with living expenses but it is not always enough.
“When electricity bills and rego come in, you don’t have the money on the spot and the following week you have no money left over for food,” he said.
For years, he tried to make up the difference by going to a payday lender.
“I don’t think they check everyone’s history so it was easy,” he said.
“You put your details down and you have money in your account in 24 hours.
“I was battling for it for a few years and just didn’t see any sunlight at the end and I got behind bills.”
Mr Futcher said the payday lenders did not ask questions, they made it “fast and easy” and offered him “more and more”.
“They [the payday lender] gave me three or four loans one after the other and said, ‘We’ll wipe this loan and give you another,’ but the court ruled they shouldn’t have given me any of them,” he said.
When he began to fall behind on his repayments, their offers turned to harassment.
“You tell them you don’t have the money but they keep ringing,” he said.
It became so persistent Mr Futcher began to ignore every call he got.
He was eventually contacted by a financial counsellor from the Salvation Army’s Moneycare team who sat down with him and went through all his finances.
“They try to help you as best as they can. They’ll print out every debt you have and go over it with a fine-tooth comb,” he said.
Mr Futcher’s counsellor called up the companies, including the payday lender, he owed money to and worked out ways for him to go on payment plans or reduce the debt.
The counsellor even went to court on Mr Futcher’s behalf to fight for the $10,000 debt owed to the payday lender to be reduced to $1,000.
“I didn’t even have to go to court — they sent the paperwork off to judge who ruled on it,” Mr Futcher said.
The pandemic saw him enter financial strife once again. His marriage broke up during the peak of the pandemic in NSW and he was forced to move out of his house.
Because he was doing some work he believed he was not allowed any assistance from the NSW Government, but he was wrong.
His financial counsellor helped him navigate the system so he could apply for an interest-free bond loan from the Department of Communities and Justice and move into a private rental home.
“If wasn’t for them I probably would be living on the street,” Scott said.
He also said the help from Moneycare had given him the tools to negotiate bills on his own.
“At the moment I’m kind of flying solo. I have my head above water, but if it wasn’t for them … I strongly suggest getting help if you need it, ASAP.”
Mr Futcher’s situation last year is what financial counsellors are fearing millions of Australians will experience once safeguards like JobKeeper, JobSeeker and moratoriums on evictions are wound back.
There are also fears people facing job losses will turn to credit if the Federal Government winds back responsible lending practices.
Financial counsellors treating themselves as a ‘mental health helpline’
Ms Angle said the helpline was expecting a surge in calls at the end of the year, especially from people who may be suffering the mental health consequences that often came with increased financial stress.
“People who are calling us are sometimes suicidal,” Ms Angle said.
“We’re treating ourselves like a mental health helpline.”
Ms Angle said people who used to call regularly had gone quiet because they had more money in the bank due to JobSeeker payments (which used to be called Newstart) increasing.
In September, JobSeeker payments were reduced from $550 to $250 a fortnight. They will run until the end of December when recipients are expected to return to the $40 a day allowance of the original payment.
On the other hand, Ms Angle said, there would be millions of people who had never reached out for help with money issues before and were ashamed to do so now.
Others have told financial counsellors they did not think their situation was bad enough for them to qualify for help.
Ms Angle said she feared this would lead people to take out more credit, “especially given the possible repeal of the responsible lending laws”.
She is encouraging people to reach out to financial counsellors and know the difference between a financial advisor and counsellor.
“Counsellors are always free, they don’t earn commission and they are trained to deal with people in trauma,” she said.
The Salvation Army’s Moneycare manager Tony Devlin agreed calls to financial counsellors were low largely because of loan repayment deferrals by the banks.
“That’s been massive and that’s a large source of our referrals,” he said.
“For six months the world was put on hold.”
Mr Devlin said at the end of September, some banks began proactively contacting customers who had deferred their debts and referring them to Moneycare.
“We’re about 5 to 6 per cent down on the same time last year but we are expecting that to change,” he said.
Mr Devlin said the dip in calls had allowed staff to set up at home and given the team “breathing space”.
“We are standing by,” he said.