In 2011, Legal Aid NSW and Victoria Legal Aid joined with West Heidelberg Community Legal Service for the National Bulk Debt Project. To date, the project has negotiated waiver or closure of debts worth over $7.1 million with creditors such as major banks, insurance companies, credit providers, debt collectors and utility providers.
People in long term financial hardship often also have significant other problems such as mental health issues, chronic disabilities, or homelessness. The additional stress of long term debt has been shown to lead to consequences such as family violence or interface with the criminal justice system. These people are never likely to be in a position to repay their debts, even after accessing emergency relief from charities.
How it works
Through the website www.bulkdebt.org the National Bulk Debt Project collects debts owed by eligible clients of financial counsellors and community lawyers to certain creditors such as banks, credit providers or debt collectors.
To be eligible for referral to the National Bulk Debt Project, a client must meet the following criteria which has been developed to demonstrate long term financial hardship:
- in receipt of a Centrelink income support payment as their only income;
- does not own a housing asset (and so has to pay rent or board);
- is unlikely to improve their financial prospects in the long term; and
- cannot afford to repay the debt.
More information about the project, including which creditors are in the current collection, is on the website.
Where to next for long term financial hardship?
In negotiations for waiver of debts, most creditors have recognised that it is commercially unrealistic to pursue debts owed by those experiencing long term financial hardship. Agreement has been reached with a number of creditors on simpler and more efficient processes for dealing with these types of debts. Over the next 12 months, along with Financial Counselling Australia, the Project will continue to engage with the credit industry on strategies to address long term financial hardship.
JULIE MARON is Senior Solicitor Civil Law with Legal Aid NSW.