Some points to keep in mind when running a credit and debt file are listed below.
Hardship teams – make contact with the hardship team at the creditor or relevant company.
Statute barred – consider whether the debt is statute barred (in most cases, this will be where it has been more than six years since the client made the last payment or 15 years for secured debts) and, if there is a chance that it is, do not acknowledge the debt in writing.
Judgment proof – consider whether your client is judgment proof (but don’t automatically rely on this). If your client is judgment proof (and it is not a secured debt you’re dealing with) certain protections against enforcement are available. Additionally consider whether the relevant creditor or company has agreed to participate in the Bulk Negotiation Project.
Negotiation, dispute resolutionand defences – very few of our clients end up in court for credit and debt matters. You will most likely be required to negotiate with the creditor on the basis of the client’s hardship. The new consumer credit regime means that litigation is even less likely – both internal and external dispute resolution should be exhausted first. You should nonetheless be aware of your client’s legislative rights and relevant defences for the purposes of both advising your client of their options and negotiating with the creditor.
Financial counsellors – most clients with credit and debt issues should be booked into a financial counsellor who can assist with assessing the client’s income, expenditures and liabilities and with developing a manageable budget. Financial counsellors also have a comprehensive knowledge of hardship programs at various creditors (as well as practical options such as early access to superannuation funds on hardship grounds (see the DHS and ATO websites for further information), Centrepay arrangements and utility relief grants) and often have good points of contact at the relevant creditors. They may also be able to provide an expert’s report (generally a statement of financial position) to use in your negotiations with creditors.
Centrepay – Centrepay is a free direct bill-paying service available to people receiving payments from Centrelink. As a practical way of making repayments and keeping up with new bills, you should ask the client whether they would like certain payments to be made directly from their Centrelink benefit. This service is available for, for example, rent; bills for phone, electricity, gas and water; no interest loans; child care; and rental of household goods. Further information is available on the Centrelink website. Think carefully about entering a client into a Centrepay arrangement (for example, do not do it if they are judgment proof or dispute their liability for the debt).