Hardship Loan and Support Options

Are you having trouble paying all your monthly bills? Have you considered a hardship loan, hardship variation or government crisis assistance? If you live in Australia and are suffering from job loss, illness, disability, natural or other disasters, a relationship breakdown or a death in your family there may be several options that can help you through this tough time.

When dealing with financial issues a loan may seem like the best solution to your problems, when in fact it could create more issues. If you are borrowing money to put food on the table or pay bills, a loan may not be the right solution. If you are struggling to pay your bills, you may want to consider a Hardship Variation and also speak to a free financial counsellor to discuss cash flow solutions – this can keep you out of debt and fix cash flow issues.

If you are in need of a hardship loan to replace essential household items or repair a vehicle, etc. there are a few options available – see hardship loans section.

The Hardship Variation
Under Section 72 of the National Consumer Credit Code, creditors must consider your request for a payment variation on outstanding loans, lines of credit or other debt instruments under a hardship variation request within 21 days of your request. This could include credit cards, retail store credit cards, auto loans, home mortgages, joint loans, personal loans, and others including utility bills.

 
To apply, you simply need to contact your creditor by phone or in writing. You can ask to speak with a hardship officer or with their customer service department. You will need to have the details of your loan or debt amount available for discussion. You can then say you would like to change your repayment conditions because you are experiencing a hardship. You will need to explain your hardship and how long you think the hardship will last and outline how much you will be able to make in monthly or fortnight payments.

You can change your payments so you extend your loan period enabling a smaller regular payment, postpone your payments for a period of time or you could suggest both. The creditor must let you know within 21 days of their decision. Ensure that the negotiated amount is something you can afford as there is no sense in negotiating an amount that you still cannot afford. Learn more about Financial Hardship here

If you are denied you can complain to the Financial Ombudsman Service or the Credit and Investments Ombudsman and have them review your case.

Hardship Loans
There are also a number of private financial institutions that may be willing to help with specific hardship loans based on their criteria. Be sure that if you are considering second tier loans to pay off your debt that it is affordable. Taking out a more expensive loan to pay off a cheaper loan would not be a wise decision. In many cases, filing for hardship variation can be better than getting into further debt. Unless you are working with a credit counselling organisation that is consolidating your loans and negotiating on your behalf, these third-party loans can be more expensive.

Hardship Loan options can include:

– Short-term loans (be wary as these can be very expensive)
– Personal loans from you bank, credit union or non-bank lender
– Benefit type loans (Centrelink, non-profit, community based loans)
– Peer to Peer Lending

* Note: Approval criteria will vary based on organization.

 
Crisis Assistance
The government of Australia and the State or Territory in which you live may also offer specific help in certain crisis situations. From death, emergency situations, sickness allowances, or to avoid homelessness there may be hardship assistance to help you. These programs, benefits or allowances carry specific eligibility requirements, but when combined with a hardship variation can often get you through a rough financial situation.

Be willing to search out all your options including grants and non-profit loans in your area in addition to the options mentioned above.