You’ll probably experience a range of occasional debts that you’ll have to manage as part of your budget. Some of these will be for periodic expenses, like car maintenance or appliance replacement costs. Others will be for unforeseen events like illness, car accidents, a birth or death in the family and separation. Debts like these can present a challenge and lead to considerable stress if you’re already managing on reduced income.
It’s essential as you prepare your budget, including your debt management plan, that you leave some money to use for these situations. That way, you can avoid going further into debt and compromising the progress you have made with bringing your debt under greater control.
If you are unable to come to an arrangement for the payment of these debts, it is essential that you seek help. Depending on your circumstances, failure to pay can lead to serious consequences, including the possible loss of your home.
- General options for 'other' debts
- Medical and dental bills
- Wellbeing expenses
- Pet expenses
- Car expenses
- Unexpected household expenses
- Insurance premiums and excess
- Loans from family and friends
- Funeral expenses
General options for 'other' debts
Your range of options for payment of these bills and debts includes:
- request a deferral for payment of the debt;
- negotiate an informal payment plan with your creditor;
- negotiate a formal formal payment plan with your creditor;
- check if you have taken out any insurance to cover circumstances like job loss;
- check if you can re-draw from or consolidate the costs with your home loan;
- check with your superannuation fund if they will allow early access to your superannuation to pay the debts;
- if you receive Centrelink benefits you may be able to apply for an Advance payment loan or a StepUp Loan, or other one-off financial assistance depending on your circumstances; and
- if you are eligible for a Utility Relief Grant, you may apply and thereby free up funds that had been put aside to pay utility bills for other household debts.
Find out more about your rights and options for paying these debts.
Medical and dental bills
In addition to the options listed above early access to your superannuation funds on specified compassionate grounds may:
- pay for medical or dental expenses, for you or a dependant of yours; and
- pay for transport to medical or dental treatment, for you or a dependant of yours.
Find out more about early release of superannuation to pay these expenses.
Check if your gym or sports club can be flexible with payments. Some may offer special payment arrangements for members in financial hardship.
See the general options listed above for negotiating with your vet.
You may be able to negotiate a formal or informal payment plan with your mechanic or tyre supplier if you need to spend money on your car urgently. Usually a mechanic will hold your car until full payment is made, so make sure you know exactly how much the repairs will cost.
Unexpected household expenses
As well as the general options listed above, there are various no-interest loans schemes (referred to as NILS) which provide people on low incomes with access to credit for essential household goods.
Loans of typically between $800 and $1,000 are available, along with financial counselling through local welfare organisations such as Good Shepherd and St Vincent de Paul and common items purchased with them include washing machines, refrigerators and hot water services.
If you are renting you might check if your landlord is obliged to pay for a replacement item.
Insurance premiums and excess
Under the Code of Banking Practice and the General Insurance Code of Practice, banks and insurance companies are required to consider any application from you for financial relief if you are having difficulty paying your debts. Note that not all insurance companies have agreed to be bound by their industry’s Code of Practice, but the vast majority have.
See the general options listed above. You may also negotiate for monthly or quarterly payments to make the debt more manageable.
Loans from family and friends
Friends or family who have lent you money may agree for you to hold off making payments until your circumstances improve, so you can initially pay off your other creditors. Sometimes you may want to make higher payments on personal debt because lending you the money has caused hardship to someone you know and your relationship might suffer if you don’t pay it back as you originally agreed to do.
As well as the general options listed above, you may be able to apply to Centrelink for money to assist with funeral expenses.
You may be able to access your superannuation funds early to pay for expenses associated with a dependant’s death, funeral or burial if you are experiencing financial difficulties. You should enquire initially if your superannuation fund will release funds. If they do so, you can apply either on the grounds of severe financial hardship to your superannuation fund, or on compassionate grounds through the Department of Human Services.
You can find other useful information on paying for funerals here: