As the economic ripple effects of the coronavirus hit Australian businesses, leading financial and consumer law firm MyCRA Lawyers urges people to talk to their creditors as soon as possible.
With the Queensland Government announcing relief measures for small to medium business in the form of a six-month deferral of payroll tax obligations, MyCRA LAwyer’s CEO Graham Doessel said: “it’s important to remember that while it’s extra time to pay, it doesn’t take the debt away.”
According to the World Health Organisation a vaccine for the virus maybe 18 months away, but the financial repercussions could last for five years.
“While to begin with it was just tourism operators and seafood exporters, the risk of an extended and prolonged economic downturn is real and affecting the entire economy,” Mr Doessel said.
“The problem is even though the tourists and customers may have stopped the bills won’t stop and that can mean defaults on people’s credit files.
“That may not sound serious but as soon as you are 14 days or more late in making a loan repayment it will go on your comprehensive credit file for two years.
“This will impact your ability to access credit. Get a default or a court judgement on your file and you will be feeling the financial symptoms of coronavirus for five years,” Mr Doessel said.
Mr Doessel said if you are struggling to pay bills then you should contact your creditors straight away and apply for hardship.
“Most lenders have a positive obligation to offer hardship in genuine cases, so for example, if you have had your casual work hours cut back dramatically due to coronavirus related causes, you may have a case for hardship provisions to kick in.
“The same goes for your business if you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room. Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.
“Lenders and companies like Telstra, Optus, AGL, Origin Energy and the like all have hardship policies for people who are genuine victims of circumstances beyond their control,” Mr Doessel said.
“The economic impacts of coronavirus are certainly some of the worst we’ve seen in recent years, even giving SARS a run for its money,” Mr Doessel said.
“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider (in writing if possible) to let them know the circumstances and to check no bills have gone unpaid,” he said.
“Most companies have the discretion to forgive a debt in extreme cases, as no company wants to be the catalyst that drives a customer to suicide over a bill.”
“One way to stay on top of your bills and anything you may have missed is to check your credit files each year which is free and won’t be recorded negatively on your file, you can do this at www.FreeCreditRating.com.au,” Mr Doessel said.