16 October 2018

Lost his job, about to lose his house – and this WA man is not alone

Source: www.smh.com.au

Ray* is a rural West Australian who lost his job around 18 months ago and hasn’t been able to find another one.

He had to move out of his house and rent a room from a friend, as the Newstart unemployment allowance, which is well below minimum wage and the basic cost of living, left him unable to make his mortgage repayments.

After six months being unable to find a job he began trying to sell his house, but it’s sat on the market for the past year.

He rented it out, but the tenants stopped paying the rent then skipped out not only in arrears, but also leaving Ray with a $3500 water bill.

He’s been unable to get new tenants in.

There’s $135,000 still owing on the mortgage.

He’s now $12,000 behind on the repayments and can’t pay the $2000 rates bill from the council, let alone the $3500 water bill.

In an effort to cover his living expenses he maxed out his two credit cards from back when he had a job, and is now in debt to the tune of $14,000 and the debt collectors are now hounding him.

After six months being unable to find a job he began trying to sell his house, but it’s sat on the market for the past year.

He rented it out, but the tenants stopped paying the rent then skipped out not only in arrears, but also leaving Ray with a $3500 water bill.

He’s been unable to get new tenants in.

There’s $135,000 still owing on the mortgage.

He’s now $12,000 behind on the repayments and can’t pay the $2000 rates bill from the council, let alone the $3500 water bill.

In an effort to cover his living expenses he maxed out his two credit cards from back when he had a job, and is now in debt to the tune of $14,000 and the debt collectors are now hounding him.

Last week, Ray rang Perth financial counsellor Kristen Meath in high distress after his bank issued an ultimatum: voluntarily surrender his home or declare bankruptcy.

Ms Meath was able to explain to Ray the short and long-term consequences of bankruptcy and how it might affect his assets.

She explained to him how the process of voluntarily surrendering his house might work.

She was able to give him an alternative to the bank’s ultimatum: short-term, he could apply for a Hardship Variation, which could give him more time to research the option of bankruptcy.

She referred him to a face-to-face financial counsellor for more help to negotiate with his bank and with the debt collectors.

He told Ms Meath he felt a huge relief after the call, which he made in a state of panic.

At least now, he knew and understood more about his position and his options.

The number of calls to the WA-based debt helpline Ms Meath works for, a 1800-number for people in financial distress, have risen 84 per cent for the July-September quarter this year on last year.

The WA service received 3646 requests for help in the quarter in WA alone this year compared to 2001 this time last year.

Manager Merlene Price described the spike as alarming.

With only 2.5 full-time-equivalent financial counsellors funded to provide help, staff were under “enormous pressure” to support at least 60 people a day.

On just one day last week, this tiny team fielded 118 calls from desperate West Australians.

“We are receiving calls from an increasing number of people dealing with utility, credit card and mortgage stress with their debts often spiralling out of control,” she said.

“Whilst we urge people to seek the help of a financial counsellor, the sector cannot currently keep up with demand, with up to four weeks to wait for an appointment in some areas of the state.”

Synergy has advised the Financial Counsellors’ Association of WA that up to 15 per cent of their customers in this state – more than 140,000 people – are assessed as being in financial hardship.

Executive officer Bev Jowle said the 150-plus financial counsellors and financial capability workers the association represents were all seeing people daily who were experiencing extreme poverty and mental stress as a result of a stagnant economy, no increase in wages or Centrelink payments and increased energy, food and transport costs.

She said the people seeking assistance were spending almost 50 per cent income on housing, when the official measure of affordable housing is that costing 30 per cent of a household income.

They were spending 18 per cent on food, 10 per cent on transport and 5.5 per cent on utilities, leaving very little – just over 10 per cent – remaining to cover the cost of all other daily living expenses.

“With costs rising again this year, people will be thrown into a further state of poverty.

“It is unacceptable in a country like Australia.”

The May 2017 state budget increased fixed electricity charges by 10.9 per cent, or $169 annually.

It more than doubled the funding of the state’s key hardship utilities grants scheme (HUGS) in 2017-18 to $20 million.

It reinstated funding for the free financial counselling services such as the debt helpline that the former government axed in 2015, forcing the services to turn away thousands.

But after almost two-thirds of the HUGS funding was spent within the first four months of the financial year, the government in December announced a six-month suspension of HUGS, putting struggling Synergy and Water Corporation customers on to payment plans amid suspicions the utilities were dipping into the scheme before looking at alternative payment options.

Then the May 2018 budget showed a drop in HUGS funding from the $25 million allocated in 2017 pre-suspension, to $16 million for 2018-19, to $10 million for 2019-20 onward.

Fixed electricity prices rose another seven per cent, representing a $121 increase, and water charges rose 5.5 per cent.

“While some increases in household fees and charges are more than we would like, these increases are lower than last year and we have also worked hard to make them lower than expected in some cases,” Treasurer Ben Wyatt said at the time.

“The McGowan Government remains committed to minimising the impact on those Western Australians most in need, with total subsidies of $2.2 billion to be spent across the next four years.

“Although the State’s finances are improving, we still need households to do their bit.”

The budget paper itself said the growing numbers of individuals and families facing serious financial hardship increased the likelihood of adverse social consequences including family breakdown, homelessness, crime and poor health and education outcomes.

“Financial counselling has been shown to assist those most at risk, and the Government will continue to support the financial counselling sector to deliver services where they are most needed,” it said.

The Association is calling for more attention and support to Australia’s one in seven people living below the poverty line during Anti-Poverty week, which begins on Monday.

*Ray’s name was changed to protect his privacy.

 

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