Back on her feet
For people living with a mental illness, debt can be an extremely complex problem. Especially when their illness reduces their emotional or intellectual capacity to assess the risks of taking on credit - and when there are lending companies prepared to take advantage of them.
67 year old Mary is a case in point. When she was first referred to our financial counselling service on the Mornington Peninsula by a local mental health service she had accumulated a huge amount of debt to the point of being suicidal.
"At the time she had six different lines of credit, which in combination were causing her to spiral into an irreversible cycle of debt," says Good Shepherd Youth & Family Service financial counsellor Sally Johnston.
Even though Mary was on a Centrelink Aged Pension - and before that, a Disability Pension - unscrupulous lenders had lent her so much money that she owed in excess of $26,000.
"She should never have been given the loans in the first place," says Ms Johnston. "Firstly, her poor mental health meant she could not reliably assess the loan contracts, and secondly, she lacked the capacity to pay them back."
Ms Johnston sat down with Mary and assessed what she could pay, and what she couldn't. She wrote to all the creditors, suggesting that they had erred in giving Mary the loans and that she intended to contest them with the Financial Ombudsman.
After substantial negotiations Ms Johnston managed to convince two of the lenders to waive the loans completely. That represented a total of $20,795 that Mary did not have to pay back. The other three adjusted their interest rates and repayment terms so Mary could afford to pay the loans back gradually.
Ms Johnston also helped Mary create a budget to enable to her to keep paying off her mortgage and service the remaining loans. Mary is now able to cope with her debt responsibilities and feels much more positive about her future.
To support important programs like our financial counselling service, please visit www.goodshepvic.org.au/donate