Advocating for vulnerable, low income debtors
Low-income debtors often get the worst deal when it comes to dealing with debt—inaccessible or weak hardship assistance, particularly for those in long-term hardship; misleading or severe debt collection practices; default judgments and harsh debt enforcement; inappropriate bankruptcy or debt agreements. Through a number of specific actions, drawing particularly on calls to our financial counsellors, we will seek a better deal for low-income debtors.
This campaign also features a specific research project looking at the experience of default judgment debtors. A default judgment occurs when a demand for money is made through the court, and a consumer does not defend the matter, meaning a judgment is entered without any independent checking of the claim.
The impact of default judgments on financial wellbeing can be severe, with harsh debt collection commonly undertaken, and the potential for seizure of property or garnishing of wages, or bankruptcy or debt administration.
With default judgments representing up to 98 per cent of civil complaints in the Magistrates’ Court of Victoria, Consumer Action has identified a need for greater research into why so many consumers fail to lodge a defense and is pleased to have received a grant from the Victoria Law Foundation which will allow us to research the issue.
This project will involve in-depth interviews with default judgment debtors from a variety of backgrounds which will enable discussion of debtors’ experiences, the meaning they attach to those experiences, as well as the complex contexts which frame decision-making.
By providing insights into the experience of low-income debtors who have a default judgment, the research will seek to make recommendations to improve access to information, advice and support for low-income debtors. A final report will be released early in 2013. The research may also provide an evidence base from which to consider improvements to court processes so that claims are assessed fully, taking into consideration the lived experience and needs of debtors.
Reports, submission and media releases about our advocacy for low-income debtors are available here.