When you should see a financial counsellor


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Pressures have changed.

When Iresha Lehane began working at Lifeline's financial counselling service on Sydney's northern beaches five years ago her clientele's main worry was ballooning credit card debt. Now she is seeing people with "a whole world of financial trouble".

Often, they are trapped by the shame and sense of failure about their debt; some keep the crisis a secret until their lives are in financial chaos.

when you need to see a financial counsellor

Lehane, who is trained in consumer law, credit law, bankruptcy, counselling and advocacy, is seeing more and more complex, multi-faceted problems.

She says her Lifeline practice typically assists people in their 50s, sole traders and small business owners whose companies have gone under, and others who have lost their jobs. There are also clients with alcohol and substance abuse issues. Health issues such as cancer can have a huge impact on finances.

Strata debt is another huge issue, as many people now buy apartments rather than houses.

Usually, the body corporate holds the power and decides what will happen if someone falls behind in their bills.

"The minute their strata fees are outstanding by $10,000, they fall into bankruptcy legislation," says Lehane.

"The body corporate takes it down the path of bankrupting them. The biggest bankruptcies in the country are strata."

How financial counsellors can help

Many Australians are not aware of financial counselling: a non-judgemental, independent and free service run by not-for-profits. Financial counsellors operate for all ages and there is no income or assets hurdle to qualify to see one.

The service is there to help people who are in debt, are struggling financially, or feel they are being ripped off by unfair financial practices.
Research shows financial counselling can be incredibly effective.

The latest report from Financial Counselling Australia has found that, through counselling, 74% of clients avoided legal action, 66% resolved financial difficulties, 63% improved their mental wellbeing, 53% avoided bankruptcy, 69% were more positive about the future and 45% improved their physical health.

Financial counsellors can help their clients get more time to pay off debts by contacting the hardship departments of banks and other financial institutions, utility companies, the tax office and many more organisations on their behalf, says Lehane.

"As long as a person is engaged in financial counselling, the banks are willing to stretch out that debt collection process," she says.

Counsellors can also see if you qualify for what is known as a hardship moratorium or, if it's a particularly challenging situation, a debt waiver.

"We don't ask for debt waivers in every single situation; it's got to be complex, challenging situations for people," says Lehane, adding that often people will say they don't want to pay the debt and ask for a waiver, but they must meet some strict eligibility criteria.

Financial counsellors also have connections with other services and can help with legal recommendations, drug and alcohol counselling and mental health professionals. Sometimes people need help from a clinical psychologist to deal with the root causes of their complex needs before they can get their finances under control.

While financial counsellors frequently prevent bankruptcy, in some instances declaring bankruptcy can allow people to have a fresh start. 
There is no limit on the number of sessions with counsellors, says Lehane.

"If the person is willing to engage with us, they can stay with us as long as it takes."

free financial counselling where to get help

People most at risk

Different communities have different financial pressures. Kylie McLoughlin, a financial counsellor with Anglicare in Box Hill, Melbourne, says among her young clients buy now, pay later (BNPL) has had a big impact on debt problems.

"They're using it to either top up their daily living expenses, or for immediate gratification to go out and buy that handbag or that jumper to feel part of society," says McLoughlin. If they miss a payment, there is a charge from BNPL. "If they use six different payday lenders, suddenly they've got a lot of debt to pay off."

McLoughlin is also seeing families with young children who are struggling to buy food and clothing and are unable to pay school fees.

"Their rents or their mortgages are falling behind," she says.

"Christmases and birthdays are hard for young families - especially single parents - because they don't want their kids to miss out. They're going to BNPL and spending a couple of hundred dollars to get their children clothes, new toys or an iPad because they feel guilty."

Another big issue is housing.

"There's an increase in the number of clients that come to us because they can't pay their mortgages," says McLoughlin.

"The banks are supportive in helping clients out and sometimes that does mean clients have to sell their house because they can't afford the mortgage. But then they've got to be able to find a rental property and afford that."

McLoughlin sees people who have inherited a house from a deceased estate but are unable to afford the upkeep, as well as others who are living with family members, in boarding houses or are homeless.

"I think if clients had affordable, secure housing, then their mental health might be in a better position. And they might be able to manage their finances better," she says.

Worsening mental health

One of the most worrying groups Lehane sees is gamblers. She believes gambling addiction doesn't stop with willpower and there needs to be legislative changes to limit problem gambling.

"It is taking people down. Personal responsibility is just not enough," she says.

Women in damaging, coercive, controlling relationships use the service too. Financial counsellors are trained to identify financial and economic abuse and then support the women. When women over 55 leave their marriage or experience abuse, they often have very little financial backing.

However, the biggest suicide risk among clients is older Australian men. Lehane sees men over 55 and a pocket of men in their 80s who call the banks and other institutions aggressively and tell them to go jump. She finds that men can be stuck in their financial hardship and taking the next step to resolve their issues can take a long time.

"It's very common," she says.

Start the conversation

Financial counsellors want to raise awareness about their services to help people before it becomes too much of a burden.

"How do we find the unmet need? How do we find that guy that's sitting in his corner going, 'I don't know what to do?' Because these are the people that we want to attract," says Lehane.

"It's easier to come to financial counselling than it is to therapeutic counselling. When somebody comes in the door, then we can start working with them to go 'we'll fix this immediate situation', if that's what you want, or if you want to look at the biggest stuff that's going on in your life, we're here."

No matter the issue, McLoughlin says financial counselling - face-to-face or over the phone - is available to everyone.

"Whether they're employed or unemployed, it's just there for anybody that is having financial difficulty," she says.

"If you don't feel strong enough to do your finance or your hardship applications with creditors, come to a financial counsellor and just start that conversation."

How to contact a counsellor

You can call the National Debt Helpline on 1800 007 007 or visit ndh.org.au. The helpline, established in 2016, will connect you with a financial counsellor in your area.

You can also contact charities such as the Salvation Army and Mission Australia or Financial Counselling Australia. If your search leads you to a financial counselling service that charges a fee, you haven't got the right one.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.