Financial hardship aid programs are always available in every country in the world under various names. In Australia, there’s the financial hardship assistance program that is aimed towards people who have low income. The program is typically run by the bank, but how does it work?
First off, let’s study the basic of this assistance, shall we? There are three financial difficulty types acknowledged by banks, which are:
- Late payment assistance
- Financial hardship
- Prolonged and permanent state of financial difficulty
Basically, the financial hardship is a condition where the customer has some kind of debts to the bank; and although they are willing to fulfill the payment but they are unable to do so because of something unexpected happens.
These unexpected circumstances may include:
- Becoming a victim of a natural disaster
- Lost a job or obtain other employment status changes that reduce the earning dramatically
- Death of a spouse, divorce, etc that crippled the financial stability
- Injury or illness
Basically it’s those unforeseen circumstances that cause the family to lose a big portion of their income, which render them from the ability to pay for the debt.
Financial Hardship Assistance Options
Now that we’ve explained briefly about the nature of acknowledged financial hardship, let’s discuss the solution for this problem, shall we?
Naturally the bank doesn’t want to take the asset of their customers by force; therefore these banks have created some ways to assist the customer during their hardest time. The bank typically will try everything they can to avoid auctioning their customer asset. Below are the common assistance programs offered by the bank to solve the problem:
This is also known as the postponed repayments or deferred payments. The bank that applies this program for their customer will stop the customer’s responsibility of repayment for a specific period.
This program provides you with some additional time, but you still have to pay for the extension of time you get. The bank will add arrears to your loan balance, but you get to skip the repayment for a specific period of time.
This method is basically a convenient method to reduce the amount of money you have to pay for each month by extending the loan term to full term. For example, you went and get a loan with two years of loan term (with the maximum full term of five). During that time, your business went down and you are having trouble paying the monthly payments. The bank then extends the loan term to five years in order to reduce the money that you’ve to pay monthly.
Interest only repayments
This method will prioritize the payment of interest for a specific period. This means that the bank will allow the customer to pay just the monthly interest, while the main debt will be paid later on.
Last but not least, the bank may offer loan freeze for some special circumstances. Loan freeze means that you get to stop paying for the debt for a period of time, and after it is ‘unfrozen’, you would still have the same standing just as before the loan freeze started.
It is very important to note that the bank will carefully examine each of the case, so the chance in getting approval for such financial hardship assistance grants is pretty strict.
- Personal Hardship Assistance Program
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