With cost of living on the rise across the country, it’s no secret many Australians are finding it increasingly difficult to make ends meet.
Between rising prices of property, petrol, groceries and utilities, many households are really feeling the financial pinch as uncertainty in the economy looms, pushing some Australians further into debt.
Whatever the reason behind financial stress, the Australian Financial Security Authority (AFSA) emphasised the importance of acting quickly to take control of the situation, stating there was help available for those who were struggling.
“If you are facing financial difficulties, you are not alone and there is support available,” AFSA chief executive Tim Beresford told Yahoo Finance.
"It is important to get help early and understand your options."
Beresford said the best starting point when facing money trouble was to find out how much debt you had.
“Consider your most recent statements from all your lenders – including banks, loan providers, buy now, pay later services – to understand where you’re at," he said.
“If you are having immediate difficulty making your repayments, talk to your creditors. This could include your bank and the companies that provide electricity, gas, internet and phone services.
"They may have hardship programs, or may be able to offer flexible payments or a lower interest rate.”
If you have unmanageable debt
Beresford said for those with unmanageable debt, "there are personal-insolvency options available".
"Each option has different impacts, depending on your circumstances, but a formal insolvency option may be able to provide the fresh start you need,” he said.
The three main formal insolvency options are bankruptcy, debt agreements and personal insolvency agreements.
More information about personal insolvency options is available at the AFSA website.
Talk to a financial counsellor
Beresford also advised that when considering your finances, make sure you seek trustworthy advice from a reputable source such as a financial counsellor or insolvency professional, particularly if you’re exploring personal insolvency options.
“Financial counsellors offer free, independent and confidential services to discuss your financial situation and help you get back on track,” he said.
Financial counselling services are available through the National Debt Helpline on 1800 007 007 or at ndh.org.au.
You can also get advice from trusted sources such as insolvency professionals registered with the AFSA on their website.
Red flags to look out for
Finally, Beresford advised: “Be wary of dodgy advisers.
“There are some advisers who promise quick fixes that sound too good to be true," he said.
"Remember – if it sounds too good to be true, it probably is.”
He added that warning signs to look out for included charging high fees that were often payable in advance, or trying to rush decision making.
These advisers can be reported via AFSA's tip-off service.