Not everyone can apply for serious financial hardship. Not getting enough money to pay your bills or to meet your daily needs wouldn’t suffice. The law set specific circumstances where individuals can take refuge from this legal exception.
Serious hardship is a situation in which you can no longer pay your debts and bills. It is a relief offered by creditors and the taxation office to release borrowers from certain types of financial obligations.
Are you considered to be in serious hardship?
You will only be considered to be in serious hardship if you can no longer provide accommodation, education and food to yourself, your family or your dependents. It also applies when your income or assets are insufficient to provide for you and your dependents’ education, medical expenses and other basic necessities.
The creditors will look into the circumstances that contributed to your financial situation. These circumstances typically include serious illness, financial problems, natural disaster and other difficulties that had a serious impact on your finances. Serious hardship may also apply to you if you are struggling to find employment and if you are finding it difficult to deal with debt finances.
How do you qualify for serious hardship?
Your creditor or the tax office shall look into the overall financial picture. Are you struggling financially because there are no other means of meeting your needs and obligations? Or, you simply don’t know how to manage your money wisely? When you apply for this type of relief, it is important to complete your application and explain how you meet the hardship requirements.
The Australian tax office listed acceptable proof of financial hardship
Here are examples of documents to support your claim:
Final eviction notice.
- Your landlord must give you a letter evicting you from the property for failure to pay rent. Without this eviction letter, you cannot prove eviction. It is also important to note that the eviction notice must comply with local and state laws in writing.The notice needs to state, plainly and concisely, that its purpose is to evict you as a tenant.
- Submit proof of medical debts to prove that you or any of your dependents has undergone expensive treatment that left a serious dent in your finances.You can also submit letters from the doctor verifying your inability to work. This also includes the lack of ability of a certain family member to work due to illness.
Notice of legal action pending in court.
- Your creditors may file legal actions against you to recover the debt. The action depends on the amount you owe and your ability to pay. Some use mediation service to encourage you to come to an agreement over the debt. Others engage the services of a solicitor who specializes in debt recovery. If your creditors want to make a claim in court you have to get copies of the issuance’s from the court and submit them to the companies in which you apply for financial hardship.
Notice of repossession of assets such as a vehicle or goods.
Notice of repossession of mortgaged property.
- If you default on a mortgage, the bank can take repossession of your home. The bank will obtain an order for possession in the courts. Once the eviction warrant is issued, it will be carried out by the appointed bailiffs. The bank will sell the home to recover the lost arrears.
Pending disconnection of utility services.
Do you have a pending notice of disconnection for your gas, electricity and water services ? You need to show the disconnection notice to your creditors or the ATO.
- Proof of loss of employment. You can submit copies of your termination letter. Aside from its financial implication, job loss is one of the most stressful experiences in a person’s life. You may grieve your loss, and feel anxious of tomorrow, especially if you have money debts to pay.
If you are in a tough financial situation, remember there are support services available. You can apply for financial hardship assistance from independent providers, or come up with a hardship agreement with your credit provider. The new agreement may temporarily adjust the amount you normally pay to a lower amount, or make a new arrangement which is more affordable and more convenient for you.