Tags: Financial and money advice. Counsellor
If you’re experiencing financial problems credit repair and debt management firms may fail to fix your credit and debt issues. You may finish up paying high fees resulting in additional financial stress. Credit repair companies may offer ‘debt fix’, ‘debt management’ or ‘debt solution’ services to get out of debt and help you take back control of your finances. Many of their “solutions” can have serious long-term consequences for you and your credit rating. If your debt problem is the result of a short-term issue such as the loss of a job but that you expect to find work again within a few months then you may be able to make hardship arrangements with your creditors.
These may include reduced repayments and fees, extended term of loan, repayment moratoriums and debt consolidation. Your creditors will probably require documentation to support your case for hardship such as a budget, Centrelink statements if you are receiving benefits and pay information from your most recent job.
Contact your creditors advise them of your situation and they will let you know how to access their hardship provisions. Also, most of the major creditors provide online access to their hardship arrangements. If you’re being overwhelmed by your debts and don’t see any “light at the end of the tunnel” a Debt Agreement may be appropriate or even bankruptcy as a last resort. You should fully inform yourself about each of these options before locking yourself into a particular course of action and cost. The Australian Financial Security Authority’s (AFSA) website lists extensive information on debt management and AFSA’s video on how to avoid untrustworthy debt advisers is well worth viewing.
“Credit fix’, ‘credit wash’ or ‘credit repair’ companies may offer to act on your behalf to challenge incorrect listings on your credit report. They may claim they can improve your credit rating by having negative information removed from your credit report, but genuine default listings and other correct historical information cannot be removed. Credit repair companies typically charge $1,000 or more – and sometimes upfront – to fix one listing in your credit report. Money wasted when you can arrange for any wrong information to be removed yourself for free.
If you believe your credit report contains any inaccurate, out-of-date, incomplete, irrelevant or misleading information, firstly complain to your current credit provider, the listing creditor or credit reporting body. Even if you don’t know who has put the information on your credit report, you can complain to any credit reporting body or creditor. If a credit reporting body or credit provider refuses to correct your credit file, they must provide the reasons why and evidence proving the correctness of the information.
If you are not happy with the result you can contact the newly formed Australian Financial Complaints Authority (AFCA) a service previously provided by the various Financial Ombudsman services. If the credit listing is wrong, AFCA can order the creditor to ask the credit-reporting agency to remove the listing. You will not be charged any fees for this service. As always, inform yourself before making any financial decisions. Check out moneysmart.gov.au.
Peter Dallimore is a volunteer Financial Counselor at the Bribie Island Neighbourhood Centre. He can be contacted through the Centre on 3408 8440 or by Email at firstname.lastname@example.org. You can make contact if you are experiencing financial hardship or would like general information on financial matters. The service is free.