It is probably no surprise to the readers of this article that there are many people in our district that are currently experiencing financial stress in one way or another.
If there is one common mistake that people make when, either due to the lack of work or other financial pressures, they find themselves in a default situation with either their bank or some other form of creditor that they simply ignore the problem and/or make promises to the bank/creditor that they simply cannot meet.
The simple advice that I always give to people, whether I am acting for them trying to negotiate an outcome with their bank/creditors, or when I am acting for a client trying to collect monies from another person, is not to make a promise of repayment which although on the face of it looks attractive to the person that you owe the money to if you cannot honour that commitment.
Also, when people come to see me on the eve of being evicted from a property and try to blame the bank for their problem, quite clearly the bank is not the problem and the problem has just has not occurred in the last twenty-four hours. Banks have procedures and policies to follow and, once again in my experience, if a customer goes to the bank either before they default or shortly after they default and communicate with the bank as to what their position is, their ability to make good the default and in some cases unfortunately agree to hand the property bank to the bank, the banks generally will do everything within their power to give the people as much assistance as possible.
It is also my experience that in recent times banks are prepared to allow properties to sell for less than what is owing to the bank. This of course cannot be done without having good communication with the bank and sometimes we have even seen where the bank has agreed to not only to allow the sale to proceed but have also agreed not to pursue the customer for the shortfall.
Unfortunately, by the time we normally get to see the person who is in financial stress they are not only in default with the bank, but they have outstanding rates, outstanding credit cards and other debts. Although they may think by entering into repayment programs with various creditors they will eventually be able to get “on top” of their debts, sometimes unfortunately their only option is to declare themselves bankrupt.
Superannuation is something that a bankrupt can hold onto and therefore draw upon once they are of retirement age. I know some people think that by appealing to their superannuation fund for special circumstances they can draw on their superannuation savings therefore saving themselves from going bankrupt, but I generally find that is not in their long term best interests because it at best delays their bankruptcy but does not always save them from going bankrupt.
The other issue that people must take into account is the physical and mental stress they suffer as a result of being under financial pressure, and I know I have had several clients who after declaring themselves bankrupt have commented, that it was quite a physical and mental relief to them.
Simply my advice is that people who are, or people who have friends or relatives who are in financial stress, is to get them to seek advice early, get them to communicate in an honest and open fashion with their bank or credit card company as early as possible, and generally most banks and other companies will work with people to see a good outcome for both parties.
