Australians recalled best practice approach to debt litigation as an economic challenge

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The Australian Financial Security Authority (AFSA), Financial Counseling Australia and the Australian Restructuring Insolvency and Turnaround Association (ARITA) remind people in financial difficulty and their creditors to consider how disputes such as condominium debts could be managed in the face of difficulties. economic circumstances.

People in financial difficulty and creditors should be aware of the importance of dealing with unmanageable debts quickly and understand the options available to resolve debt disputes before formal insolvency is considered.

“Creditors are strongly encouraged to be flexible when supporting customers in financial difficulty – manageable payment plans, hardship arrangements and similar alternatives are the best place to start,” the managing director said. from AFSA, Tim Beresford.

“If all other avenues have been exhausted, the insolvency system is a last resort.”

Tim Beresford also underlined the wider importance of the insolvency system for the economy – especially for creditors who have exhausted other avenues of payment.

“Having an accessible and robust insolvency system is an important part of the Australian economy,” said Mr Beresford.

“Our personal insolvency system builds confidence in lending, making credit accessible to consumers while providing protection for those with unmanageable debts.”

“Under the Australian insolvency system, anyone with a debt of more than $10,000 can bring a formal bankruptcy action against an individual. We recommend that you exhaust all other options first.’

“AFSA’s experience is that most creditors offer a flexible approach and explore reasonable alternatives before taking formal action.”

“For people in financial difficulty, this means that the first and best option is to actively engage with any creditors to whom you owe money and try to reach a mutually agreed resolution with them. People in financial difficulty are often surprised at how positively most creditors will act to find a solution to their situation.

“We monitor how the personal insolvency system is used and engage directly with industry stakeholders where necessary.”

Get early help

Financial Counseling Australia CEO Fiona Guthrie explained the importance for people under financial stress to seek help quickly from a trusted source.

“We encourage anyone experiencing financial difficulty to contact a trusted source, such as a financial adviser, to discuss your situation,” Ms Guthrie said.

“We can work with you and your creditors to understand your financial situation and help you understand the options you have to get back on track.”

“Many debt problems can be solved when appropriate action is taken early.”

The role of trustees

Once a person has entered into a formal personal insolvency agreement such as bankruptcy, registered trustees play a critical role, as ARITA CEO John Winter has pointed out.

“Bankruptcy can be a stressful time for people in vulnerable situations, but it can also bring a sense of resolution to the difficulties people faced before being put into bankruptcy,” Winter said.

“While trustees in bankruptcy must act strictly in accordance with bankruptcy law, their primary role being to secure a fair outcome for creditors, a person who goes bankrupt can be assured that they will be treated fairly and with respect for its bankruptcy. If you file for bankruptcy, working with your trustee in bankruptcy will greatly reduce the stress of the process.

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