What is considered a hardship for debt?


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If you’re struggling to make repayments on your debt, you’re not alone. Many people struggle with debt hardship, and there are ways to get back on track before it’s too late. There are many forms of help available to you, from talking to your lender, to applying for hardship. If you think you might be experiencing debt hardship, but aren’t sure which signs to look out for, read on below.

How do you know if you need nation wide debt?

There can be many signs of financial hardship. You may experience some, or all of the following:

  • You are regularly behind on bills
  • You can’t be sure of which bills to pay first
  • You struggle to make ends meet
  • You rely on your credit card
  • You’re already paying late fees or penalties on bills
  • You have defaults, or have collectors contacting you
  • You’re worried about losing your home, car or other assets
  • You spend a lot of time worrying about money and finances

What happens if you can't make your payments?

If you think that you might miss a repayment, you should be ready to contact your lender. Call them before the repayment is due and explain your financial circumstances. You can still do this after you’ve already missed a repayment, but doing it beforehand shows that you are trying to find a solution as soon as possible, and may be seen as a positive sign by your lender.

If you miss more than one repayment, there still may be options available to you. Some could be:

  • Complete a Statement of Financial Position –This allows your lender to see whether or not you can afford your home loan repayments.
  • Change loan terms – If repayments are a short term issue, your lender may be able to help by changing the terms of the loan.
  • Downsize to a cheaper home – If repayments are no longer affordable, you may be able to consider moving to a more affordable debt.

What are your options?

While other options may be available depending on your situation, the two most common options when it comes to debt difficulties are:

  • Apply for a hardship variation – Contact your lender, and discuss changing your loan repayments due to financial hardship. You may need to explain the reasons why you are having difficulties and explain how long you think your financial problems will continue. Your lender may also wish to discuss how much you can afford to repay at this time. Your lender must contact you within 21 days to let you know the outcome of your hardship request.
  • Consider selling your home – If your circumstances are unlikely to improve, it may be an option to sell your home. Another option may be to live somewhere else if possible and rent out your home until you can afford the repayments again.

*Disclaimer: This article contains general comments and recommendations only. It is not intended to be and should not be construed as legal advice. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action, you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs.

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