Help calls rising as crisis bites

Jessica Benton
A Geelong financial counselling service fears its increasing flow of clients could turn into a flood as the global economic crisis bites harder in the region.
Diversitat counsellor Jocelyn McMillan predicted the local impact from the crisis was about to “escalate”.
“People are just starting to see the effects, especially households, and I don’t think it’s going to get much better in the short term,” she said.
“We’re going to see more job losses or loss of hours, which will result in reduced income. In the past, where people may have been able to service debt, it may mean (capacity to repay) will start to dry up.”
Ms McMillan said the Diversitat service was counselling more clients in mortgage stress.
“This is going to bite when the job market takes a hit. There has been some relief with interest rate reductions in the past but that was only temporary,” she said.
“We’re also seeing a lot of bankruptcy. It’s mostly personal but there are some businesses, too.”
Ms McMillan said most of the counselling service’s clients were already struggling to repay credit card debts.
“The majority of people would have credit card debt of some degree.
“Their debts range from one to two credit cards to seven or eight maxed-out cards.”
Ms McMillan said most of the clients had struggled for years with their personal finances while unemployed, renting or in casual or part-time jobs.
Demand for financial counselling was rising as one of Australia’s biggest collection agencies warned of “dangerously high debt levels” next month.
Prushka chief executive officer Roger Mendelson predicted a 20 per cent surge in overdue credit card accounts in February.
“Households invariably overspend at Christmas and during the holiday break and are often left with maxed-out credit cards,” he said.
“This year businesses are going to be tougher on households carrying debt than in the past. Businesses have been suffering from cash-flow pressure due to dropping margins and falls in revenue and many are more likely to take a tougher line with overdue accounts.”
Ms McMillan urged anyone in financial crisis to discuss potential solutions with their creditors.
“There are a number of avenues that can be taken if people find themselves in trouble. It all centres on being able to have a dialogue with creditors and letting them know what’s going on.
“We look at each person’s situation and, for example, if they have superannuation then they might be able to apply for mortgage arrears. It just depends on a person’s individual circumstances.”