Consumers in financial hardship warned of “debt vultures”

Western Australians in financial distress are advised to be wary of budget and debt management businesses that set to profit from their hardship.

The Consumer Credit Legal Service of WA (CCLSWA) has warned of “debt vultures” preying on vulnerable consumers, who contact them promising to solve their financial difficulties.

CCLSWA said companies worked with these businesses  to get names and contact details of people who were near or in default of their home loans and refer consumers to debt management businesses.

Consumers have entered into contracts with the business for services to help them with their debt.

However, consumers “often they just get into even more debt.”

“Often they get threatening messages from these companies saying their bank will repossess their home unless urgent action is taken, creating even more fear and stress,” CCLSWA Managing Solicitor Gemma Mitchell said.

Ms Mitchell said it occurred at times when consumers were already under extreme stress and were fearful of losing their property and consumers were placed under greater stress.

“Often they get threatening messages from these companies saying their bank will repossess their home unless urgent action is taken,” she said.

“Extortionate fees, in the thousands of dollars, are charged when the consumers can least afford it and many clients claim that the fees are charged for services that were not delivered.”

“To make matters worse, the contracts empower the debt vultures to place a caveat on their home, preventing it from being sold until the outstanding fees are paid.”

She recommended people in this position to seek free advice first.

“We advise consumers in this position not to succumb to these predatory practices and not to sign any contracts until they have received some free financial counselling and free independent legal advice,” Ms Mitchell said.

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