Debt Counselor Phones at "Capacity" in Australia over Mortgage and Rent Issues

Too Much Debt: Financial helpline counselors are at capacity as record numbers of older Australians struggle in poverty.

Down under, a Record Number of Older Australians are in Financial Trouble.

Key Points

  • The National Debt Helpline — a federal government-run financial counselling service — said it's on track to receive a record number of cases through its call centers this year — many from older Australians who can't meet their mortgage or rent payments.
  • Many calls are from older Australians who can't meet mortgage or rent payments.
  • Counselors have started fielding calls from people struggling to switch to principal and interest mortgage payments.

Phones Never Stop Ringing

"The phones just never stop now," financial counselor Greg said. "They're just going day after day, after day. "You put the phone down, you pick the phone up again."

I sat with Greg while he took some calls. One man who called in had lost his job, and the bank was on his back about meeting his repayments. Greg coached him through his options.

"Have you approached the lender in relation to a hardship arrangement, or have you approached the lender to talk about reducing your payments, putting payments on hold, until you get back into employment?" Greg asked.

Short Staffed

Karen Cox co-ordinates the Financial Rights Legal Center, which runs the call center.

"Call volumes are huge," she said. "We're at capacity in terms of the number of calls we can take, in fact we're a bit short staffed at the moment."

Ms. Cox said hundreds of thousands of Australians struggled with credit card and mortgage debt — the most she has seen in her career managing financial help call centers.

Salvation Army Hotline

In addition to the National Debt Hotline, the Salvation Army is flooded with calls.

The Salvation Army's financial counselling service, Moneycare, warned it was at breaking point. In the 2017-18 financial year, Moneycare saw an 18 per cent increase in Australians seeking help.

The service has seen a big increase in the number of Australians over the age of 55 reaching out for help to deal with what it calls "severe debt", which is debt at more than six times a person's annual disposable income.

​Need Help?

Australians who need help can contact the National Debt Helpline on phone at 1800 007 007.

Gee!

Gee who coulda possibly thunk this could happen?

Didn't we hear that home prices only rose, and buying homes was a retirement plan.

It's So Easy to Buy a Home

It was so easy that 13-year-old kids were buying homes. Flashback July 23, 2017: 13-Year-Old Kid Buys $552,000 Home

Buying a house can be quite scary, especially when it’s your first purchase and renovation – there are so many things to think about.”

I suspect there is a bit more to think about now.

Related Articles

  1. Australia's Housing Bubble Finally Popped?
  2. Mortgage Prisoners Totally Screwed in Australia as Refinance Rejections Soar

When the liquidity dries up, leveraged property buyers are royally screwed.

Mike "Mish" Shedlock

Comments (10)
No. 1-7
2banana
2banana

Question #1. "Can you explain what a full recourse loan is?"

Question #2. "What assets can I hide in bankruptcy?"

"After me, the deluge..."

thimk
thimk

coming soon to a theater in the US and Canada.

gregggg
gregggg

Ross Kay is advising not to buy real estate in Canada and the US.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

In Australia, I believe are personal property loans are full recourse. Business loans are another matter. Hopefully, someone from down under will clarify. Regardless, what cannot be paid, won't but the debt will hang forever. That's my understanding.

keiron
keiron

Generally all loans in Australia are fully recourse. From an old loan statement: "You should understand that you may owe money to your credit provider even after the mortgaged property is sold." So you either have to pay any money still owing (including additional fees) or go bankrupt.

Realist
Realist

Full recourse loans mean that the borrower is personally responsible for paying back the entire loaned amount. If you owe 400,000 on your house and the bank repossesses the house for non-payment, and the bank sells the house for 300,000, you still owe the bank 100,000. The bank can then come after your other assets in order to recover the 100,000. This type of mortgage loan is common in Australia and Canada. One of the consequences of these types of loans is that it is not easy for a homeowner to walk away from their house. They are still on the hook for the money owed. As a result, distressed homeowners in this situation will usually sacrifice almost everything to hold onto their house (like sell vehicles, recreational vehicles, investments, pensions, etc). If the homeowners other assets do not cover the debt still owed, then mortgage insurance (premiums are paid by the homeowner) kicks in to make the lender whole. This type of mortgage loan is one of the reasons that Canadian banks have been my favourite investment for many years. Their delinquency rates are typically less than 1%, and with full recourse loans plus mortgage insurance they rarely lose any money on a home loan. I also prefer Canadian to Australian banks, as Canada has more stringent mortgage rules with minimum downpayments and stricter qualifying standards than Australian banks.

pgp
pgp

Look on the bright side... Australians can expect more jobs opportunities. Working for the government in financial counseling.

However, when they finally stop building houses and cars down there, the public-service sector will be the only significant employment opportunity left. Fortunately like Greece, where everyone is an employee of the government, it might take a couple of decades before the melt-down.

Let's face it, after a half century of uncontrolled immigration from patronistic cultures within Italy, Greece, Asia and the cabals of pre-Thatcher UK unionism, how could the country not become some kind of broken socialist oligarchy.