While most Australians have weathered the tougher economic conditions well, some Australians are struggling with financial obligations and may become caught in long-term debt, a new survey has revealed.
Veda Advantage’s Australian Debt Study Report, completed by Galaxy Research in September, found 16 percent of Australians are having difficulty repaying debts and 21 percent of those who are likely to apply for credit over the next six months say they are currently having difficulty paying debts.
Furthermore, almost 23 percent of respondents struggling to repay bills owe more than they did 12 months ago.
While the majority of Australian families are managing credit responsibly and continue to pay down debt obligations, a small, but sizeable population of Australians are struggling, creating a debt divide, says Veda Advantage general manager Russell Evans.
“Sixteen percent of Australians with debt are finding it difficult to make their payments. This indicates some of these people are in a high risk category, and may seek to take on more debt despite not meeting current financial obligations. There is a real risk these vulnerable individuals will become caught in debt,” he said.
Evans said that urgent government action to add comprehensive credit reporting to the government’s credit reforms is needed.
“The Federal Government is to be congratulated for implementing new responsible lending laws, but needs to give credit providers the tools they need now,” he said.
“A simple change to the credit reporting laws will allow credit providers to check a borrower’s current credit commitments and repayment history before additional credit is granted. This would protect families from taking on more debt at a time when they need assistance to help them out of debt.”
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