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 wherein individuals can take refuge from this legal exception.
Serious hardship is a situation in which you can no 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.
Who is 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. If you recently went through a serious illness, financial problems, natural disaster and other difficult circumstances that had serious impact on your finances. It also applies to people who struggle to find employment while their bills pile up, and those who are adjusting to new debt payment structures.
How do you qualify for serious hardship?
Your creditor or the tax office shall look into the overall financial picture. Are you really 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? Your request for hardship must be reasonable as well. 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, and the likes. Without this eviction letter, you cannot convince the government that the landlord wants you to move out of the property. It is also important to note that the eviction notice must comply with local and state laws in writing and delivering the notice to you. The eviction letter must be addressed to you. Otherwise, there will no legal relationship with you and the landlord. The notice needs to state, plainly and concisely, that its purpose is to evict you as a tenant.
- Medical bills. 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. Everyone knows that medical debt impacts your finances, and changes your financial status. The unpaid medical bill can be turned over to collections too. You can also submit letters from the doctor verifying your inability to work, or 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, while 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. For example, if your car is repossessed, you need to submit notices form the lender after it repossessed the car or sold it.
- 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. When 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. If you have a pending notice of disconnection because you cannot afford to pay gas, electricity and water services anymore, 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. The stress can be overwhelming as well, and it is difficult to be resilient during this period especially if there are people who depend on you for financial support.
When you’re finding things tough financially, you can explore available options to help improve your situation so you can get up to date with your payments. 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.