While economists and bankers are boasting that Australia is one of the few countries to have dodged an official recession, spare a thought for the families sinking deeper into debt with many breadwinners having lost their jobs or had their hours cut.
Research recently conducted by the Credit Agency Veda Advantage has shown that 16 per cent of Australians are struggling to repay their debts, and one in five of these are likely to apply for credit in the next six months.
Despite the lower interest rates, almost 23 per cent of respondents said that they owed more today than they did a year ago.
Safeguards to prevent from falling further into debt
Times are about to get worse what with interest rates rising and many people are planning to apply for more credit believing that they can borrow their way out of trouble. Most Australians seem to be coping fairly well despite the downturn but there is a sizeable minority struggling.
Preventing these families from falling further into debt should be a high priority. Government legislation allowing lenders to see when a borrower is over committed is facing continued delays.
The Government however stated last week that that they were planning to overhaul the Privacy Act to allow banks full access to all of our financial commitments, including accounts with other companies and repayment histories.
These proposals are planned to coincide with new responsible lending legislation due to take effect next year.
Katherine from the Consumer Credit Legal Centre NSW felt that the proposals were a disgrace, and that the banks would be able to see which people were the best targets to lend money to.