Debt Seminar Launch
Debt seminar launches VLAF forums for 2011
A pensioner goes to a bank for a $500 loan and comes away with a $10,000 credit card. The woman cannot pay and is pursued by the bank, the stress of which has an adverse impact on her health. A recipe for disaster, and a familiar scenario for those attending the first Victorian Legal Assistance Forum (VLAF) seminar of 2011.
Seventy people attended Challenging perceptions: Understanding the lives of low income debtors on 30 March in the Lionel Murphy Centre. There were representatives from banks and other financial lenders, debt collectors, insurance companies, VLA, community legal centres and financial counsellors.
The two keynote speakers highlighted various aspects of the work of West Heidelberg CLC. VLA Board member and La Trobe academic Mary Anne Noone set the stage by showcasing her research on legal need, the complexity of clients’ lives and problems, and the type of service model needed to address these problems. This research links legal problems with mental health and general health issues, and underlines the problem financial institutions have in recovering debt from these clients. In many cases the debt recovery process exacerbates the health problems.
Denis Nelthorpe outlined the client profiles and outcomes from the bulk debt negotiation scheme that West Heidelberg ran recently. The scheme assisted 410 ‘judgement proof’ clients by bundling the debt according to financial institution and then negotiating on behalf of a group of clients. Clients for the project were found through legal aid offices, legal centres and financial counselling agencies throughout Australia. According to Denis, ‘Generally, creditors accepted the basic premise of the project - that the debtors permanently lacked the capacity to pay their debts.’
Next came our very own Q&A panel discussion, with Fiona Guthrie, the Executive Director of the Australian Financial Counselling and Credit Reform Association, teasing out the issues with the help of experts:
- Christian Mikula, Commonwealth Treasury
- Tim Gough, ASIC
- Colin Neave, Financial Ombudsman Services
- Jane Pires, Suncorp Group
- Joel Townsend, VLA
- Monique Hitter, Legal Aid NSW
- Hugh de Kretser, Federation of Community Legal Centres
- Peter Gartlan, Financial and Consumer Rights Council in Victoria.
There was a lively exchange of views on what the best solution was to the problem of debt incurred by people who can never pay it back. It seems that the bulk debt negotiating scheme is slowly educating the financial sector on the true nature of the problems of these client groups, and edging the sector closer to the realisation that it will save time and money for the institutions and much worry and stress for debtors if there is some formal process to quickly make a call on abandoning futile quests for debt that will never be repaid.
Please contact VLAF if you would like a copy of the seminar on DVD. Email jenniec@vla.vic.gov.au or ring 03 9269 0138
