Australia escaped the last financial crisis, but recently it is under threat from a huge run-up of household debt. There is an obvious risk that high household debt proves unsustainable and will lead to a US-style mortgage default crisis. Although there little mention of the side effect of such a scenario and one that has played out before in many different economies when a downturn looms. The rise of the debt collector.
In normal times, they are best annoying, adopting some tried and tested strategies, to bully you into paying, from calling your work, calling your neighbours, relentless texts and letters to slowly break you. However, when in a recession or an economic downturn, it is one of few businesses that expands rapidly. The process of recouping the debts also becomes more aggressive. The reason is a simple one, in a recession for example there is suddenly an excuse that trumps all, ‘Sorry it is a recession’. Companies of all sizes start sacking staff using the recession as an excuse to save them from employment tribunals, banks shut down customer accounts that constantly remain in debt. Credit cards are stopped overnight and 30day demands for the balance to be repaid are requested, in short, it is a profitable scenario for many.
Australian Household Debt crisis leads to Debt Collectors on the attack
In the media it may be reported that we Aussies are curbing our spending and calming down, I think a clearer picture would simply be people are running out of money and leveraged to the hilt, are scarping by. If the RBA raises interest rates for instance on home loans more than twice, that is 30% of the country unable to pay for their home loan and being repossessed.
Check and dispute your Credit file Today
One unfortunate factor with being in debt, is that companies will put a default on your credit file, which will stop you being able to get credit. Many people run out of money before payday and often need a little bit of credit/loan to get them to the next payday and sort themselves out. So one tactic I would suggest, is to access for free you credit file and have a look quickly to see if there are any defaults on your name and if there is, then click dispute next to all of them. I have found many times companies put defaults on your file much earlier than they should, so you can sometimes clear your file/improve your credit score straightaway. The free one I used was this one