Nearly Half of Aussies Struggling with Debts But Don't Seek Hardship Assistance

New research shows that 47% of Australians have struggled with debts and repayments in the past 12 months - the equivalent of 5.8 million people.

That’s according to ASIC’s Moneysmart’s new report, which found that cost-of-living pressures, reduced incomes, and unexpected expenses are affecting Aussie finances. 

And yet, 30% said they would not seek a hardship assistance arrangement from their bank or lender, instead preferring to sell their belongings (42%) or get a second job (40%).

This is similar to findings from NAB in 2023, which found that 44% of Australians had experienced hardship in a 12-month period, well above the long-term average of 37%.

“For many Australians, the path to seeking help feels daunting, confusing, and challenging. It is concerning that people would rather sell their personal belongings or get a second job rather than seek financial hardship assistance,” said ASIC Commissioner Alan Kirkland.

“Customers in hardship are entitled under the law to request assistance. These findings should be top of mind for lenders when supporting Australians in financial hardship.

“The message for Australians experiencing financial stress is that banks or lenders have a responsibility to support customers. If you are worried about being able to make your repayments, you’re entitled to ask your bank or lender for help.”

One of the most significant barriers to seeking financial help was a lack of awareness, with more than half (55%) of Australians not even aware that they are entitled to ask their bank or lender for hardship assistance.

Anxiety and stress caused by hardship (51%), feeling shame or embarrassment (40%) and feelings of failure (40%) are also common potential emotional barriers Aussies face.

Nearly one-third (32%) were concerned a financial hardship variation would negatively impact their credit score. This is not the case, however: even though a Financial Hardship Indicator (FHI) will appear on someone’s credit report and remain there for one year, it won’t impact their score.

These findings have prompted ASIC to launch a new awareness campaign called Just Ask! This campaign aims to encourage those struggling financially to contact their lender.

“Australians facing financial hardship should reach out to their bank or lender and 'Just Ask' for help. Seeking financial hardship assistance is a right, and lenders are required to respond to every request for hardship assistance," Mr Kirkland said.

What is financial hardship?

According to the Australian Financial Complaints Authority (AFCA), financial hardship is defined as “when you are temporarily unable to make a repayment on a debt, such as a credit card, home loan or personal loan”.

Essentially, it’s when you don’t have enough money or resources to cover your existing debts and repayments, and it can be caused by many different things, such as:

• Reduced work, income and unemployment.
• Rental and mortgage stress.
• Significant life events.
• Injury and illness.
• Emergency events like natural disasters.
• Domestic violence and abuse situations.

A hardship variation is a temporary arrangement with the lender to help you out in the short term. The goal is to return you to your regular repayment schedule as soon as possible.

Standard hardship arrangements often include any of the following:

• Payment deferrals or extensions.
• Loan restructuring (e.g. changing from variable to fixed rates and longer loan terms).
• Changing to interest-only payments for a period of time.
• Waiving certain fees and charges
• Debt consolidation
• Repayment plans
• Hardship grants or assistance programs

Eligibility for financial hardship assistance usually depends on your circumstances and the policies of the specific lender or service provider. The bank or lender will usually assess each application on a case-by-case basis.

As a licensed lender and credit provider, Jacaranda Finance offers financial hardship support. If you’re a current Jacaranda customer and your circumstances have changed or you're experiencing financial hardship, you must contact us or advise us to contact you as soon as possible.

You can also see our FAQs on financial hardship for more information.

Other resources for financial help

In addition to Moneysmart, you may find the following resources helpful if you’re experiencing hardship or money troubles in general: 

• National Debt Helpline: 1800 007 007 
• Small Business Debt Helpline: 1800 413 828 
• Find a financial counsellor near you 
• MoneySmart Budget Planner 
• Australian Banking Association – financial hardship contacts

It’s crucial to avoid turning to quick financial fixes to try and get out of financial hardship, as this can often make things worse. 

According to 2022 NAB research, 10% of Australians facing financial hardship accessed a payday loan within three months.

However, these loans have hefty hidden costs, so contacting your bank or lender instead will usually be a much safer option.

Written by - William Jolly

Content Manager

William is the Content Manager at Jacaranda Finance. He has worked as both a journalist and a media advisor at some of Australia's biggest financial comparison sites such as Canstar, Compare the Market and Savings.com.au, and is passionate about helping Australians find the right money solution for them.

You can get in touch with William via williamj@jacarandafinance.com.au.

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