tag:theconversation.com,2011:/us/topics/financial-hardship-66938/articlesfinancial hardship – The Conversation2023-05-07T20:17:51Ztag:theconversation.com,2011:article/2050152023-05-07T20:17:51Z2023-05-07T20:17:51ZThe case for boosting JobSeeker for all: younger people report greater financial hardship<figure><img src="https://images.theconversation.com/files/524557/original/file-20230505-27-um5ftm.jpg?ixlib=rb-1.1.0&rect=0%2C336%2C4982%2C2450&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In response to calls to raise the JobSeeker payment, the Albanese government is <a href="https://theconversation.com/presented-with-a-jobseeker-finding-too-clear-to-ignore-he-changed-the-subject-how-jim-chalmers-is-shaping-the-budget-204754">expected</a> to announce an increase in Tuesday’s budget only be for recipients aged 55 and over.</p>
<p>Doing so will fuel the familiar generational debate about comparative levels of hardship experienced by older and younger Australians. </p>
<p>JobSeeker’s current single rate is $49.51 a day, about 65% of the age pension and 18.5% of average full-time earnings. Last month, the government’s own Economic Inclusion Advisory Committee recommended it be raised to 90% of the age pension. </p>
<p>This age targeting is reportedly justified on the basis that older recipients are more likely to be long-term unemployed, and majority female. </p>
<p>But are younger recipients less needy? Our research suggests their need may well be greater, reporting far higher levels of hardship than older Australians, even when depending on JobSeeker.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/boosting-jobseeker-is-the-most-effective-way-to-tackle-poverty-what-the-treasurers-committee-told-him-204045">Boosting JobSeeker is the most effective way to tackle poverty: what the treasurer's committee told him</a>
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<h2>Measuring financial hardship</h2>
<p>Our results are drawn from the Household, Income and Labour Dynamics in Australia survey – better known as the <a href="https://melbourneinstitute.unimelb.edu.au/hilda">HILDA survey</a> – which each year since 2001 has polled a representative sample of about 18,000 Australians on many aspects of their lives.</p>
<p>Our first graph shows average financial hardship by age.</p>
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<p><iframe id="ma56Y" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/ma56Y/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>We compiled this index from answers given by HILDA participants to seven indicators of their material hardship over the previous nine months. These were, due to a shortage of money: </p>
<ul>
<li>could not pay electricity gas or telephone bills on time</li>
<li>could not pay the mortgage or rent on time</li>
<li>pawned or sold something</li>
<li>went without meals</li>
<li>was unable to heat home</li>
<li>asked for financial help from friends or family</li>
<li>asked for help from welfare or community organisations.</li>
</ul>
<p>About 22% of those aged 20-80 reported at least one hardship, with the average hardship of those in their 20s being 2.9 times more than those aged 55 to 69.</p>
<p>The next graph shows the constituent elements of the composite measure.</p>
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<p><iframe id="lwu5r" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/lwu5r/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>While the responses to “asking for help” – with young people presumably asking parents first – do seem to skew the results, five of the other six measures follow the same pattern. (The exception is “unable to heat home”, where there’s no significant age trend.)</p>
<p>One reason for this distinct pattern is <a href="https://doi.org/10.1111/j.1475-4991.2011.00470.x">home ownership and wealth accrual</a> over time. Young people are typically more financially stressed because they have had less time to accumulate liquid assets, such as cash and bank deposits. </p>
<p>It’s also possible that younger people are more likely to admit to hardship, though <a href="https://doi.org/10.1111/j.1475-4991.2011.00470.x">our research suggests</a> this is not a significant factor. </p>
<h2>What about JobSeeker recipients?</h2>
<p>The next graph shows financial stress among JobSeeker recipients by age before and during 2020. It also shows the effect of higher payments in 2020, when the federal government doubled the JobSeeker rate for six months (known as the Coronavirus Supplement).</p>
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<p><iframe id="rx6BF" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/rx6BF/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
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<p>Thanks to those payments, financial stress among the young fell to its lowest level in at least two decades. But that still meant, on average, those younger than 55 were 2.5 times more likely to report being financially stressed than those 55 and older. </p>
<p>The Coronavirus Supplement experiment in 2020 taught us that a higher JobSeeker payment rate can make a meaningful difference to the financial wellbeing of all Australians, both young and old.</p>
<p>We will find out shortly what the federal government has learned from this policy lesson.</p>
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<strong>
Read more:
<a href="https://theconversation.com/presented-with-a-jobseeker-finding-too-clear-to-ignore-he-changed-the-subject-how-jim-chalmers-is-shaping-the-budget-204754">Presented with a JobSeeker finding too clear to ignore, he changed the subject: how Jim Chalmers is shaping the budget</a>
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<img src="https://counter.theconversation.com/content/205015/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Should people aged 55 and over get a targeted boost to their JobSeeker payments? Our research suggests the need among young Australians may well be greater.Peter Siminski, Professor of Economics, University of Technology SydneyGianni La Cava, Adjunct Fellow in Economics, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1762182022-03-04T13:20:33Z2022-03-04T13:20:33ZYour chances of getting rid of student loan debt depend on who you are<figure><img src="https://images.theconversation.com/files/448144/original/file-20220223-25-4urvqy.jpg?ixlib=rb-1.1.0&rect=7%2C0%2C4977%2C3325&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Single mothers are more likely than single fathers to have their debts discharged in court. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/license/522936678?adppopup=true">Heide Benser/Getty Images</a></span></figcaption></figure><p>To get rid of student loan debt through bankruptcy, you must prove to the court that paying back your student loans would cause an “<a href="https://codes.findlaw.com/us/title-11-bankruptcy/11-usc-sect-523.html">undue hardship</a>.” But in our <a href="https://doi.org/10.1037/law0000338">peer-reviewed study of nearly 700 student loan discharge cases spanning 1985 to 2020</a>, we found that judges’ decisions to dismiss student loans are often influenced by personal factors, such as your gender.</p>
<p>To determine whether repaying the student loan debt is causing the debtor to experience an undue hardship, most courts <a href="https://scholar.google.com/scholar_case?case=5270362258430051298&q=brunner+v.+new+york&hl=en&as_sdt=3,43">apply three criteria</a> outlined in a case known as “<a href="https://law.justia.com/cases/federal/appellate-courts/F2/831/395/398433/">Brunner</a>.”</p>
<p>Under Brunner, to prove they are experiencing an undue hardship, debtors must first demonstrate that repaying their student loans would not allow them to maintain a minimal standard of living. In other words, repaying the debt would prevent them from meeting their basic needs, including food, clothing and shelter. Second, debtors must show that additional circumstances exist that indicate their finances are unlikely to improve. These additional circumstances could include having a medical condition or caring for dependents. Third, debtors must show that they have made good-faith efforts to repay their loans. This includes efforts to make payments on the loans or attempts to consolidate their debt.</p>
<p>Meeting these three criteria is tough. Our data shows that about 38% of the debtors in the cases that we studied received a full or partial discharge of their student loans. But we also discovered other factors regularly come into play in the court’s decisions. Here are three factors that stood out in <a href="https://doi.org/10.1037/law0000338">our research</a>.</p>
<h2>1. Being a single mom helps, but not being a single dad</h2>
<p>In student loan discharge decisions, judges <a href="https://sgp.fas.org/crs/misc/R45113.pdf">regularly consider the expenses associated with a debtor’s children</a>. Our research team found it also sometimes matters to the court whether the debtor is a single parent. Being a single parent more than doubled the chances of obtaining a discharge, but only for mothers. Single fathers did not experience any notable benefit from being a single parent.</p>
<figure class="align-center ">
<img alt="A woman seated in a kitchen looks over paperwork while a boy lingers over her shoulder with his arm around her." src="https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&rect=47%2C0%2C7892%2C5304&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/448126/original/file-20220223-15-tl6e3p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Courts are more likely to see the mother as a caregiver than they are a father.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/woman-struggling-with-home-finances-and-debt-while-royalty-free-image/1215795289?adppopup=true">Fertnig/E+ via Getty Images</a></span>
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<p>We’re not certain about why courts view single moms as more deserving of a discharge than single dads. It could have something to do with stereotypes about mothers being the <a href="https://doi.org/10.1371/journal.pone.0147315">“caregivers” in a family, whereas men are the “breadwinners</a>.” A mother’s plea to help fulfill her role as a caregiver may be seen as more persuasive than a father’s plea to be relieved of his financial obligations.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/can-you-get-rid-of-your-student-loans-by-filing-for-bankruptcy-130995">Can you get rid of your student loans by filing for bankruptcy?</a>
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<h2>2. Disclosing a medical condition helps men, but not women</h2>
<p>When assessing a debtor’s ability to repay a debt, <a href="https://casetext.com/case/educ-credit-mgmt-corp-v-jorgensen-in-re-jorgensen">case law suggests</a>
that judges must consider any difficulties a person has in trying to find a decent-paying job. </p>
<p>Such struggles are captured by the “additional circumstances” mentioned in the second Brunner criterion. Those additional circumstances include medical conditions. However, judges appear to give medical conditions more consideration for men than they do for women.</p>
<p>Our research found that men reporting a medical condition are 93% more likely to obtain a student loan discharge than men who did not report a medical condition. We did not find this same effect for women. This gender gap is highly relevant, given that female debtors outnumbered male debtors in our analysis almost 2 to 1.</p>
<p>Women’s medical concerns seem to be dismissed or overlooked in multiple arenas – from courts to <a href="https://doi.org/10.1177/2372732220942894">hospitals</a>. Psychologists theorize this may arise from <a href="https://doi.org/10.1155/2018/6358624">stereotypes</a> that suggest women may dramatize medical conditions and exaggerate their pain. </p>
<h2>3. Not having an attorney hurts your cause</h2>
<p>Thanks to ubiquitous crime dramas, it is widely known that those who cannot afford an attorney <a href="https://www.law.cornell.edu/wex/miranda_warning">can have one appointed</a>. Lesser known is that this constitutional right applies only to criminal proceedings. In most civil trials, like bankruptcy proceedings, there is no <a href="https://www.law.cornell.edu/wex/right_to_counsel">right to an attorney</a>. When debtors cannot afford an attorney, they often must represent themselves.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/every-year-millions-try-to-navigate-us-courts-without-a-lawyer-84159">Every year, millions try to navigate US courts without a lawyer</a>
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<p>In student loan bankruptcy proceedings, 33% of debtors represent themselves, often to their detriment. We found that debtors who retained an attorney improved their chances of getting their student loans discharged by at least 60%. This was true whether the debtor was male or female.</p>
<p>The benefit of having an attorney in court is <a href="https://psycnet.apa.org/record/2004-16118-011">well-supported by research</a>. Attorneys who specialize in bankruptcy are likely to be aware of the factors upon which judges rely and can build a strong case for discharge. Without an attorney, it can be difficult to know which details to disclose and how to present them.</p>
<h2>Potential solutions</h2>
<p>Getting student loan debt discharged can be difficult and emotionally draining. </p>
<p>If you are thinking about seeking relief from student loan debt, the following suggestions may help.</p>
<p><strong>Develop a strategy that takes your gender into account:</strong> For single fathers, it might be advantageous to emphasize your “breadwinning” role, show the court that you have made efforts toward repaying the loans or have tried very hard to get a decent-paying job. For women with medical conditions, provide as much evidence as you can in the form of hospital visits, attempts to declare disability and the like.</p>
<p><strong>Regardless of gender, remember that having an attorney matters:</strong> Familiarize yourself with <a href="https://www.americanbar.org/groups/legal_services/flh-home/flh-free-legal-help/">legal aid organizations in your area</a>, which can offer free legal services. Also, be sure to search for <a href="https://www.uscourts.gov/services-forms/bankruptcy/filing-without-attorney">other free legal information</a> that can be found on <a href="https://www.flsb.uscourts.gov/dont-have-lawyer">court websites</a> and similar venues.</p>
<p>[<em>Over 150,000 readers rely on The Conversation’s newsletters to understand the world.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-150ksignup">Sign up today</a>.]</p>
<p>None of this advice matters if you fail to file a separate case to get your student loans discharged – as is the case with most student loan debtors who file a bankruptcy case. Without the separate proceeding, students loans cannot be discharged. Around 241,000 people with student loan debt filed for bankruptcy in the U.S. in 2017, but <a href="https://ssrn.com/abstract=3715975">only 447 of those also filed a separate case to get rid of their student loans</a>. Consult the free legal resources to learn how to file this separate case.</p><img src="https://counter.theconversation.com/content/176218/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kelsey Lynne Hess receives funding from the National Conference of Bankruptcy Judges.</span></em></p><p class="fine-print"><em><span>Andrea C. F. Wolfs receives funding from the National Conference of Bankruptcy Judges. </span></em></p><p class="fine-print"><em><span>Deborah Goldfarb receives funding from the National Conference of Bankruptcy Judges, the National Institute of Justice, and the National Science Foundation. She is affiliated with the American Bar Association. </span></em></p><p class="fine-print"><em><span>Jacqueline R. Evans receives funding from the National Science Foundation, the National Institute of Justice, the Federal Bureau of Investigation, and the National Conference of Bankruptcy Judges. </span></em></p>When researchers examined the outcomes for cases to discharge student loan debt, they found that judges are often biased against people based on their gender and other factors.Kelsey Lynne Hess, Ph.D. Candidate in Legal Psychology, Florida International UniversityAndrea C. F. Wolfs, Teaching Professor in Psychology, Plymouth State UniversityDeborah Goldfarb, Assistant Professor of Psychology, Florida International UniversityJacqueline R. Evans, Associate Professor of Psychology, Florida International UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1673432021-09-06T04:05:19Z2021-09-06T04:05:19ZYoung Australian women in financial hardship are twice to three times as likely to experience violence<p>New research undertaken for this week’s <a href="https://regonsite.eventsair.com/national-summit-on-womens-safety/">National Summit on Women’s Safety</a> finds violence and unwanted sexual activity are far more common among young women experiencing financial hardship than women who are not.</p>
<p>It comes as the federal government has <a href="https://theconversation.com/australia-was-a-model-for-protecting-people-from-covid-19-and-then-we-dumped-half-a-million-people-back-into-poverty-165813">denied</a> Australians locked down and living only on benefits such as JobSeeker the sort of extra support it offered last year, when it effectively doubled JobSeeker during the early months of the pandemic.</p>
<p>Our findings of a higher risk of violence for women living in financial hardship is a real concern, especially when coupled with 2020 research from the Australian <a href="https://www.aic.gov.au/sites/default/files/2020-07/sb28_prevalence_of_domestic_violence_among_women_during_covid-19_pandemic.pdf">Institute of Criminology</a>.</p>
<p>That research found that of the Australian women who reported physical or sexual violence from a partner during the early months of the COVID-19 pandemic, 65% experienced an increase in the severity or frequency of violence, or experienced it for the first time.</p>
<h2>Abuse twice to three times as likely</h2>
<p>Our research, using data from women aged 21-28 collected for the 2017 Australian <a href="https://alswh.org.au/">Longitudinal Study on Women’s Health</a>, found 14.4% had experienced some form of abuse at the hands of a current or former partner in the previous 12 months. </p>
<p>The definition of abuse includes physical, emotional and sexual abuse, coercive control, harassment and stalking.</p>
<p>Among young women not reporting financial hardship, the rate was 12.9%. Among young women in financial hardship, it was 25.3%.</p>
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<a href="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419455/original/file-20210905-23-1wo84sk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
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<p>We characterised women as experiencing financial hardship if they reported they had been “very” or “extremely” stressed about money in the past 12 months and also said it was “difficult all the time” or “impossible” to manage on their income.</p>
<p>Overall, 4.6% of young women said they had been the victim of unwanted sexual activity in the previous 12 months. </p>
<p>Among young women not reporting financial hardship, the rate was 4%. Among young women in financial hardship, it was 9.4%.</p>
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<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419463/original/file-20210906-21-151kg6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
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<p>Overall, 3.7% had experienced at least one form of severe abuse at the hands of a current or former partner in the previous 12 months.</p>
<p>The definition includes being threatened or assaulted with a gun, knife or other weapon, being locked in a room, and being choked.</p>
<p>Among young women not reporting financial hardship, the rate was 2.9%. Among young women in financial hardship, it was 9.3%.</p>
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<a href="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=130&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=130&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=130&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=164&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=164&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419465/original/file-20210906-25-spv6kz.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=164&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Rates of past-year abuse by financial status.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
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<p>Abuse also leads to financial hardship.</p>
<p>To examine this we compared rates of abuse among young women who had been free of hardship the year before.</p>
<p>Among young Australian women aged 21-28 who were not experiencing financial hardship in 2016, the risk of moving into financial hardship in 2017 was 5.6% for women who had experienced no abuse in the past year.</p>
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Read more:
<a href="https://theconversation.com/australia-was-a-model-for-protecting-people-from-covid-19-and-then-we-dumped-half-a-million-people-back-into-poverty-165813">Australia was a model for protecting people from COVID-19 — and then we dumped half a million people back into poverty</a>
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<p>Among women who had experienced unwanted sexual activity, the rate was three times as big — 16.1%, compared to 5.6%.</p>
<p>Among women who had experienced severe partner abuse, the rate was almost four times as big — 20%, compared to 5.6%.</p>
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<a href="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=202&fit=crop&dpr=1 600w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=202&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=202&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=254&fit=crop&dpr=1 754w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=254&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/419467/original/file-20210906-19-77b1b4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=254&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Rates of moving into financial hardship by nature of abuse over the past year.</span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/1775/Understanding_the_links_between_women__violence_and_poverty.pdf">Derived from Australian Longitudinal Study on Women’s Health, 2017 Wave</a></span>
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<p>The research builds a strong case for governments to continue to invest in programs including helplines and counselling to address violence against women, a case made stronger by COVID-19.</p>
<p>COVID has created new opportunities for agencies to move quickly with innovative, fast-moving partnerships, such as those seen between police and health departments.</p>
<p>But to enact real change, it will be necessary to look beyond dealing with perpetrators and supporting victims.</p>
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Read more:
<a href="https://theconversation.com/grattan-on-friday-morrison-finds-strong-women-can-be-tough-players-158648">Grattan on Friday: Morrison finds strong women can be tough players</a>
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<p>The causes of partner violence against women include broader power imbalances, among them the idea of “women’s work”, uneven family responsibilities, paying women differently, and ignoring unpaid care work.</p>
<p>In Australia, institutionalised gender divisions of labour in the home and at work entrench disadvantage. <a href="https://www.weforum.org/reports/ab6795a1-960c-42b2-b3d5-587eccda6023">World Economic Forum</a> data shows Australia’s overall score on gender disadvantage going backwards.</p><img src="https://counter.theconversation.com/content/167343/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alice Campbell receives funding from the Australian Research Council (ARC) Centre of Excellence for Children and Families over the Life Course.</span></em></p><p class="fine-print"><em><span>Janeen Baxter receives funding from The Australian Research Council. </span></em></p>Research undertaken for the National Summit on Women’s Safety has found one in four young Australian women in financial hardship experienced abuse from a current or former partner.Alice Campbell, Postdoctoral Research Fellow, Life Course Centre and Institute for Social Science Research, The University of QueenslandJaneen Baxter, Director, Life Course Centre, Institute for Social Science Research, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1569482021-04-20T05:11:19Z2021-04-20T05:11:19ZSometimes people can do with a break: 3 ways tax debt relief rules are too tough<figure><img src="https://images.theconversation.com/files/391321/original/file-20210324-23-177otlr.jpg?ixlib=rb-1.1.0&rect=0%2C404%2C6000%2C3206&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Rawpixel.com/Shutterstock</span></span></figcaption></figure><p>When Debbie (not her real name) lost her main client and was left without a reliable income, the sole trader sold her home and adjoining investment unit to pay off her debts and ensure she had the means to support her daughter and herself.</p>
<p>But things didn’t work out as she had hoped. </p>
<p>A year later she was still mired in debt – only now to the Australian Tax Office, owing more than A$70,000 in capital gains tax from the sale of the investment property. By the time the payment deadline came, she still owed about A$61,000 plus A$13,500 in ATO-charged interest. </p>
<p>So she applied for tax relief under the “serious hardship” relief provisions that have been part of Australian tax law since 1915. </p>
<p>Her case might seem exactly the sort of reason why Australia’s <a href="https://www.legislation.gov.au/Details/C2021C00169">Taxation Administration Act</a> gives the Commissioner of Taxation discretion to release individuals “in whole or in part” from tax debts, if they will “suffer serious hardship” by being required to pay. </p>
<p>Debbie had always paid her taxes on time. A single mother, she had never drawn child-support payments. She was not in good health, having had breast cancer and depression. But her application was rejected. Twice. </p>
<p>Because Debbie’s claim had a fatal flaw, according to the rules governing the tax commissioner’s discretion. She couldn’t show that having her tax debt waived would, on its own, save her from serious financial hardship. </p>
<p>That is, the rules effectively say a tax debt can only be waived if it is the only debt pushing a person into serious hardship. But even without the tax debt, Debbie couldn’t meet her living expenses. Her application was therefore rejected.</p>
<p>So, perversely, the greater the financial hardship a person finds themselves in, the less likely a tax debt will be waived.</p>
<p>This, and a few other significant quirks, is why the ATO’s tax relief rules need reform.</p>
<h2>No published data since 2013</h2>
<p>We know Debbie’s story because she is one of a very small number that have appealed the tax commissioner’s decision to the federal Administrative Appeals Tribunal. </p>
<p>Just 34 appeals have been made in the past 50 years, according to <a href="https://www.sydney.edu.au/content/dam/corporate/documents/sydney-law-school/research/publications/slrv43n1mar2021final.pdf">our analysis</a>. All but four lost those appeals. </p>
<p>One interpretation of these numbers is the tax office almost always makes the right decision – granting relief when appropriate and denying it when not. We’re not convinced.</p>
<p>How many people apply and are granted relief in any year? We don’t know. </p>
<p>The Australian Tax Office hasn’t published those figures since 2013. The numbers for that year show about 15,000 people applied. About 2,500 were granted full or partial tax debt forgiveness.</p>
<p>We can only speculate about why this data is no longer published. But one effect is to minimise awareness that people in financial hardship can apply for tax debt relief. Our <a href="https://www.aph.gov.au/DocumentStore.ashx?id=5bf846c5-135e-43d6-8f9b-6253b61a7f36&subId=684946">research suggests</a> many more than 15,000 people could potentially qualify.</p>
<h2>Perverse rules</h2>
<p>But the perversities of the rules mean those most needing help don’t necessarily get it, as shown by the 34 cases we have examined.</p>
<p>The median tax debt in those cases was about A$80,000. A majority (19 of the 34) represented themselves, while the tax office was represented by lawyers.
The reasons they found themselves in debt were generally complex – involving serious mental and physical health problems, relationship breakdowns, carer responsibilities preventing full-time return to work, and so on. Seven were self-employed.</p>
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<strong>
Read more:
<a href="https://theconversation.com/hard-bump-ahead-drop-in-insolvencies-and-bankruptcies-is-a-ticking-time-bomb-155744">Hard bump ahead? Drop in insolvencies and bankruptcies is a ticking time bomb</a>
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<p>Looking at the reasons most of these claims were rejected, we see the need for three key reforms.</p>
<p><strong>1. The greater the hardship, the less relief offered</strong></p>
<p>As outlined above, the tax commissioner can release someone from a tax debt only when it is “solely” the payment of that tax debt that will cause “serious hardship”. </p>
<p>This was the case in the two appeals that succeeded. In cases such as Debbie’s, no relief was granted because waiving the tax debt would not resolve all the person’s financial troubles.</p>
<p>This causal link should be removed.</p>
<p><strong>2. Penalised for paying other debts</strong></p>
<p>This leads to the second reform. Evidence of a person paying off other debts is grounds to disqualify them from tax debt relief.</p>
<p>The rationale is that tax obligations shouldn’t be treated as less important than other debts. But it has the perverse outcome that someone who pays off a credit card debt before their tax is effectively barred from serious hardship relief. </p>
<p>Rather than a “one strike and you’re out” approach, the law should recognise degrees of culpability - distinguishing between someone who deliberately and intentionally disregards their obligations and someone who gets in financial trouble due to losing their job, sickness, business failure, relationship breakdown and so on. </p>
<p><strong>3. GST-related debts are excluded</strong></p>
<p>Arguably the most problematic aspect of the rules is they make no provision for financial difficulties arising from being a sole trader or running a small business. In particular, the rules exclude forgiving GST debts. </p>
<p>On one level this makes sense. GST is meant to be collected with every invoice, then forwarded to the tax office with quarterly Business Activity Statements. A GST debt is therefore pocketing other people’s tax.</p>
<p>But these days many people are forced into being small business people, such as through working as contractors. They can be overwhelmed by the paper work, and not have the cash to pay a bookkeeper to do it for them. In our experience from <a href="https://www.aph.gov.au/DocumentStore.ashx?id=5bf846c5-135e-43d6-8f9b-6253b61a7f36&subId=684946">running a tax clinic</a>, people who come to us for help on average are eight years behind on tax returns and seven years on business activity statements. </p>
<p>The rules should recognise this reality and allow GST-related tax liabilities to be forgiven in some circumstances.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/performers-and-sole-traders-find-it-hard-to-get-jobkeeper-in-part-because-they-get-behind-on-their-paperwork-137997">Performers and sole traders find it hard to get JobKeeper in part because they get behind on their paperwork</a>
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<h2>Time for a serious rethink</h2>
<p>When someone is genuinely experiencing serious financial hardship, it is futile to chase them for money they cannot pay. Forcing them into bankruptcy doesn’t help anyone.</p>
<p>We need more compassionate rules that reflect the reality of why people find themselves in debt. </p>
<p>Such reform has been made even more urgent by the COVID economic crisis.
Federal government subsidies and relaxation of normal rules have enabled many small businesses to stay afloat during the COVID crisis.</p>
<p>It hardly makes sense, given all the public money spent in other ways, for outdated tax-relief laws to force people into insolvency and bankruptcy now.</p><img src="https://counter.theconversation.com/content/156948/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ann Kayis-Kumar is Founding Director of UNSW Tax Clinic, which receives funding from the Federal Government's National Tax Clinic Program. </span></em></p><p class="fine-print"><em><span>Kevin O'Rourke chairs the Indirect Tax Committee for Chartered Accountants Australia and New Zealand.</span></em></p><p class="fine-print"><em><span>Michael Walpole receives funding from the Australian Research Council and is also involved in the running and promotion of the UNSW Tax Clinic which receives funding from the Federal Government's National Tax Clinic Program.</span></em></p>Australia’s tax relief rules are outdated. Here are three key points for reform.Ann Kayis-Kumar, Associate Professor, UNSW SydneyKevin O'Rourke, Lecturer, UNSW SydneyMichael Walpole, Professor, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1551062021-02-18T13:44:36Z2021-02-18T13:44:36ZAmericans still need a lifeline despite trillions in coronavirus aid<figure><img src="https://images.theconversation.com/files/384866/original/file-20210217-19-1lkwz89.jpg?ixlib=rb-1.1.0&rect=0%2C47%2C4576%2C2993&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Americas' financial desperation can be seen in the soaring demand for food assistance. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakNewYork/62f1bf36663c46d0bc5f67ae256076ad/photo?Query=covid%20food%20bank%20need&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=84&currentItemNo=29">AP Photo/John Minchillo</a></span></figcaption></figure><p>As <a href="https://www.npr.org/2021/02/15/968028373/lawmakers-debate-bidens-1-9-trillion-covid-19-relief-plan">Congress prepares another injection</a> of COVID-19 aid for businesses and individuals, there’s been debate about whether it’s necessary on top of the <a href="https://www.pgpf.org/blog/2021/01/heres-everything-congress-has-done-to-respond-to-the-coronavirus-so-far">US$3.5 trillion spent so far</a>.</p>
<p>President Joe Biden <a href="https://www.vogue.com/article/pandemic-relief-package-what-you-need-to-know">had initially hoped to get bipartisan support</a> for his $1.9 trillion proposal, but the <a href="https://www.npr.org/sections/coronavirus-live-updates/2021/01/31/962554923/10-senate-republicans-plan-to-detail-slimmed-down-covid-19-counteroffer">only counteroffer from Republicans</a> was a $600 billion bill, with many in the GOP suggesting more money wasn’t needed. And <a href="https://www.marketwatch.com/story/experts-worried-about-overheating-suggest-placing-automatic-spending-curbs-on-bidens-1-9-trillion-covid-relief-bill-11612813694">some economists have expressed concern</a> that giving Americans too much right now could overheat the economy. </p>
<p>We are public opinion scholars at the Harvard T.H. Chan School of Public Health. In cooperation with our partners at the Robert Wood Johnson Foundation and National Public Radio, <a href="https://doi.org/10.1080/05775132.2020.1866905">we conducted a survey in July and August of last year</a> to try to understand how the first round of aid had affected American families in need. What we found shocked us then and feels relevant now as the government negotiates its next steps.</p>
<p>Despite <a href="https://www.pgpf.org/blog/2021/01/heres-everything-congress-has-done-to-respond-to-the-coronavirus-so-far">trillions of dollars</a> in government assistance, about two-thirds of families that suffered job losses or reduced wages during the pandemic still reported facing serious financial hardship. </p>
<p>Many people were struggling – <a href="https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-recessions-effects-on-food-housing-and">and still are</a> – just to pay for basic necessities, like food and rent. </p>
<h2>The first round of pandemic aid</h2>
<p>Congress <a href="https://www.pgpf.org/infographic/whats-in-the-cares-act-heres-a-summary">passed most of the initial relief in March</a>, including direct payments to qualifying families, expanded unemployment benefits and loans to small businesses that turned into grants if they kept workers on their payroll. </p>
<p>By July 1, when we began our survey, <a href="https://www.nytimes.com/2020/05/28/business/economy/coronavirus-stimulus-unemployment.html">most Americans entitled</a> to a direct check should have received it, and unemployed adults were still receiving supplemental aid of $600 a week on top of state benefits.</p>
<p>We wanted to understand the financial burdens experienced by American families that were economically harmed by the coronavirus pandemic. And we wanted to see whether the government aid was helping the people who needed it most.</p>
<p>Using a nationally representative, randomized survey design, we contacted 3,454 adults and asked them about the financial problems facing their households. We focused on the 46% who said they or other adults in their household either lost a job, had to close a business, were furloughed or had their wages or hours reduced since the start of the coronavirus pandemic. We published our findings in the economic affairs journal Challenge in January. </p>
<h2>Serious financial problems</h2>
<p>While it seems like a no-brainer that Americans weren’t ready for the unexpected employment disruptions caused by the COVID-19 pandemic, it was surprising to us that federal aid and <a href="https://theconversation.com/what-the-25-billion-the-biggest-us-donors-gave-in-2020-says-about-high-dollar-charity-today-154466">charitable assistance</a> seemed to be doing so little to support the people it was intended to help. </p>
<p>We found that the aid didn’t put much of a dent in the financial problems faced by families earning less than $100,000, whether because relief <a href="https://www.hks.harvard.edu/faculty-research/policy-topics/poverty-inequality-opportunity/only-one-quarter-service-sector">was delayed</a> or <a href="https://www.newyorker.com/business/currency/whats-happening-to-all-the-cares-act-money">wasn’t spent</a>, the amount wasn’t adequate or the funds <a href="https://www.gao.gov/products/GAO-20-701">never made it to the intended recipients</a>. </p>
<p>Among households with employment or wage losses during the pandemic, 87% of those earning less than $30,000 a year and 68% of those earning $30,000 to $99,999 told us they were still facing serious financial problems. And more than half of households in these income brackets reported they had already used up all or most of their savings – or they didn’t have savings to begin with. That share jumped to over three-quarters for people with incomes under $30,000.</p>
<p>Savings take years or decades to accumulate, so it’s likely these households are in even worse trouble now. What’s more, <a href="https://www.nytimes.com/2020/08/08/business/economy/lost-unemployment-benefits.html">significantly less aid has been provided</a> from the federal government since we conducted our survey.</p>
<p><iframe id="k7UjU" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/k7UjU/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Many Americans still need a lifeboat</h2>
<p>Our findings suggest there is a definite need for further government aid on a large scale for tens of millions of families.</p>
<p>A useful way to think about this is how the government provides <a href="https://training.fema.gov/emiweb/downloads/is7unit_3.pdf">relief after a natural disaster</a>. In disasters, cash payments are often sent directly to those in need, like lifeboats launched to rescue people at risk of drowning.</p>
<p>And in fact, the pandemic has been an economic disaster for some – <a href="https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/">particularly low-income and Black and Latino households</a> – more than others. They still need a lifeboat to get them through the storm. </p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/155106/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mary G. Findling received funding for this study from the Robert Wood Johnson Foundation under grant #76253.</span></em></p><p class="fine-print"><em><span>John M. Benson received funding for this study from the Robert Wood Johnson Foundation under grant #76253. </span></em></p><p class="fine-print"><em><span>Robert J. Blendon received funding for this study from the Robert Wood Johnson Foundation under grant #76253.
</span></em></p>A survey of the impact of the first few rounds of coronavirus aid shows that most of those who lost jobs or wages due to the pandemic were facing severe economic hardship.Mary G. Findling, Research Associate at the Harvard T.H. Chan School of Public Health, Harvard UniversityJohn M. Benson, Senior Research Scientist at the Harvard T.H. Chan School of Public Health, Harvard UniversityRobert J. Blendon, Richard L. Menschel Professor of Public Health and Professor of Health Policy and Political Analysis, Emeritus, Harvard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1135642019-04-12T06:06:32Z2019-04-12T06:06:32ZFour common debt traps: payday loans, consumer leases, blackmail securities and credit ‘management’<figure><img src="https://images.theconversation.com/files/267719/original/file-20190404-123413-1x3vbwc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Businesses are structuring their lending practices to exploit loopholes in consumer credit laws</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>From Shakespeare’s Shylock to Dickens’ Ebenezer Scrooge to HBO’s Tony Soprano, characters who lend out money at exorbitant interest rates are unsavoury. </p>
<p>So what should we think of businesses that deliberately target the poorest and most vulnerable for corporate profits?</p>
<p>There has been <a href="https://australiancentre.com.au/wp-content/uploads/2015/10/Commissioned-paper-Trends-inthe-%20Australian-small-loan-market.pdf">significant growth</a> in the unregulated small-loan market, aimed at people likely to be in financial stress. Concern about the problem led to an Australian <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Creditfinancialservices/Report">Senate select committee inquiry</a> into financial products targeted at people at risk of financial hardship. </p>
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Read more:
<a href="https://theconversation.com/what-1-100-australians-told-us-about-living-with-debt-they-cant-repay-105296">What 1,100 Australians told us about living with debt they can't repay</a>
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<p>It found plenty to report on, with businesses structuring their lending practices to exploit loopholes in consumer credit laws and to avoid regulation. Charging fees instead of interest is one example.</p>
<p>Below is a snapshot of four common lending practices identified in the inquiry’s final report. The practices may be legal but they all carry the high potential to make your financial situation worse, and ensnare you in a debt trap from which it is hard to escape. </p>
<h2>1. The payday loan</h2>
<p>Payday loans are advertised as short-term loans to tide you over until your next payday. They can be up to A$2,000. The payback time is between 16 days and 12 months. </p>
<p>Lenders are not allowed to charge interest but can charge fees, including an establishment fee of up to 20% and a monthly fee of up to 4% of the amount loaned.</p>
<p>If you don’t pay back the money in time, the costs escalate with default fees. </p>
<p>Most payday loans are “small amount credit contracts” (SACC), with three companies – Cash Converters, Money3 and Nimble – dominating the market. </p>
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Read more:
<a href="https://theconversation.com/four-reasons-payday-lending-will-still-flourish-despite-nimbles-1-5m-penalty-56802">Four reasons payday lending will still flourish despite Nimble's $1.5m penalty</a>
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<p>In 2016, Cash Converters had to <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2016-releases/16-380mr-cash-converters-to-pay-over-12m-following-asic-probe/">refund $10.8 million</a> to customers for failing to make reasonable inquiries into their income and expenses. In 2018, it settled a class action for $16.4 million for having charged customers an effective annual interest rate of <a href="https://www.abc.net.au/news/2018-10-22/cash-converters-settles-class-action-$16.4-million/10403750">more than 400% on one-month loans</a>.</p>
<p>But it is not necessarily the worst offender. The Senate inquiry’s report singles out one company, Cigno Loans (previously Teleloans), for allegedly appearing “to have structured its operations specifically to avoid regulation”, so it can charge fees that exceed the legal caps.</p>
<p>If you are on a low income and need money for essential goods or services, a better option is the federal <a href="https://www.moneysmart.gov.au/borrowing-and-credit/other-types-of-credit/no-or-low-interest-loans">No Interest Loans Scheme (NILS)</a>, which provides loans of up to $1,500 for 12 to 18 months with no interest charges or fees.</p>
<h2>2. The consumer lease</h2>
<p>A consumer lease is a contract that lets you rent an item for a period of time, usually between one and four years. You make regular rental payments until the term of the lease finishes. </p>
<p>This can be appealing because the regular payments are very low. But the length of the lease and terms of the contract end up making renting an item a very expensive option.</p>
<p>The Senate inquiry report notes that while consumer leases are subject to responsible lending obligations, unlike small amount credit contracts there is no cap on the maximum cost of a lease, and you will invariably pay more than the cost of buying and owning an item outright.</p>
<p>The report refers to <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2015-releases/15-249mr-asic-finds-the-cost-of-consumer-leases-can-be-as-high-as-884/">a 2015 study</a> by the Australian Securities and Investments Commission. The study involved Centrelink recipients leasing goods. Half paid more than five times the retail price of the goods. In one case leasing a clothes dryer for two years effectively cost 884% in interest.</p>
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Read more:
<a href="https://theconversation.com/loan-shark-regulators-need-a-lesson-in-behavioural-economics-39045">Loan shark regulators need a lesson in behavioural economics</a>
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<p>Consumer lease companies disproportionately profit from those on low incomes. The Senate inquiry heard about the the number of leases being paid through Centrepay, the direct debit service for Centrelink recipients. </p>
<p>Thorn Group, owner of Radio Rentals, told the inquiry 52% of its consumer-leasing customers paid via Centrepay. About A$600 million was paid through Centrepay for consumer leases in 2108. </p>
<p>ASIC’s <a href="https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/rent-vs-buy-calculator">rent vs buy calculator</a> can help you work out the cost of consumer lease and whether a better option is available.</p>
<h2>3. The blackmail security</h2>
<p>Lenders sometimes earmark a borrower’s asset as a guarantee for the loan. If the debtor defaults, the lender takes the asset in compensation. Normally, the asset should be of higher value than the loan amount, to cover the debt if the the debtor ever defaults. </p>
<p>However, a lender might choose an asset with a lower value, because it is critical to the borrower’s livelihood. A car or work tools are two examples. The intention is to ensure the borrower prioritises repaying the loan over other expenses. Should you be unable to pay back the loan for some reason, losing an asset critical to earning an income will push you into greater financial hardship.</p>
<p>Because the practice is regarded as coercive, so-called blackmail securities are prohibited on loans lower than $2,000. The Senate inquiry report notes concern that some lenders appear to circumvent this restriction by lending more than $2,000. </p>
<p>So don’t assume generosity or oversight is the reason a lender offers you a bigger loan or to take as security an asset worth less. Think very carefully about the consequences if you can’t repay the loan. </p>
<h2>4. The credit ‘manager’</h2>
<p>If you’ve gotten into debt and ended up with a bad credit rating, credit repair services offer help with fixing your credit history or managing your debts.</p>
<p>These services may be legitimate businesses or non-profit community services. But there has been an alarming growth in unregulated debt negotiation and debt management services, charging exorbitant and hidden fees for minimal services. The fees and contract structures may be deliberately complex to obscure the costs. </p>
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Read more:
<a href="https://theconversation.com/debt-agreements-and-how-to-avoid-unnecessary-debt-traps-84072">Debt agreements and how to avoid unnecessary debt traps</a>
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<p>According to the Senate inquiry report: “On the evidence provided to the committee in submissions and public hearings, these services rarely improve a consumer’s financial position. The charges for the debt management services increase their debt, and often consumers are referred to inappropriate remedies which may be expensive and cause lasting damage. The committee heard many case studies to this effect.”</p>
<p>ASIC recommends seeking help from free services first. You can find one through its <a href="https://www.moneysmart.gov.au/managing-your-money/managing-debts">MoneySmart website here</a>. </p>
<h2>Social obligation</h2>
<p>Most people would agree we want a society that protects the most vulnerable. That includes having laws and regulations to protect the financially vulnerable. </p>
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Read more:
<a href="https://theconversation.com/there-are-serious-problems-with-the-concept-of-financial-literacy-84836">There are serious problems with the concept of 'financial literacy'</a>
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<p>The growth of financial services that target those most at risk of financial hardship suggests government and industry should take seriously the Senate inquiry’s recommendations.</p><img src="https://counter.theconversation.com/content/113564/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Here are the four common lending practices identified by the Australian inquiry into credit and financial services targeted at those at risk of financial hardship.Saurav Dutta, Head of School at the School of Accounting, Curtin UniversityHarjinder Singh, Senior lecturer, Curtin UniversityNigar Sultana, Senior Lecturer, Faculty of Business and Law, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1052962019-02-25T19:08:26Z2019-02-25T19:08:26ZWhat 1,100 Australians told us about living with debt they can’t repay<figure><img src="https://images.theconversation.com/files/260609/original/file-20190225-26174-imodlt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Unemployment and underemployment, as well as physical and mental health problems, were the most common experiences of people falling behind on debts.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Two thirds of Australian adults feel <a href="http://www.csi.edu.au/media/Financial_Resilience_Part_One.pdf">financially insecure</a>. Almost one in two have less than three months’ income saved, and almost one in three have less than one month’s income. One in seven have negligible or no savings, meaning that <a href="http://financialrights.org.au/wp-content/uploads/2017/02/FRLC-Factsheet-Financial-Hardship.pdf">financial hardship</a> – being unable to pay debts when they fall due – is just a bill away. </p>
<p>This is something that rightly concerns policy makers. Yet for all the attention given to the problem – for example, in the recently completed Senate <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Creditfinancialservices">inquiry into financial services</a> targeted at Australians at risk of financial hardship – there is little empirical research on the topic in Australia to help inform policy responses. </p>
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Read more:
<a href="https://theconversation.com/should-regulation-be-aimed-at-saving-the-payday-borrower-from-themselves-56611">Should regulation be aimed at saving the payday borrower from themselves?</a>
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<p>To address this gap, we conducted Australia’s first large-scale study on the experiences of people in financial hardship. We <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3275131">surveyed</a> 1,101 Australian adults who had been unable to pay a debt when it fell due within the previous two years.</p>
<p>The results must be interpreted carefully, as certain groups – such as people who spoke a language other than English at home, and people aged under 25 – were underrepresented.</p>
<p>Nonetheless, our findings clearly contradict a popular belief that debt problems are mostly due to poor choices. They also shed light on the profound impact that financial hardship – from temporary shortfalls in earnings to severe and ongoing deprivation – has on health, relationships and overall quality of life.</p>
<h2>Key survey groups</h2>
<p>Of our 1,101 respondents:</p>
<ul>
<li>480 (43.6%) were “wage recipients”, their main source of income being wages paid by an employer.</li>
<li>402 (36.5%) were “Centrelink recipients”, their income coming primarily from social security payments (for example, the Newstart Allowance for the unemployed, the Disability Support Pension, or the Age Pension).</li>
<li>76 (6.9%) received both wages paid by an employer and a Centrelink payment.</li>
<li>143 (13.0%) had income coming from other sources, such as earnings from their own business, superannuation, and financial assistance from family or friends.</li>
</ul>
<p>The median income for Centrelink recipients was A$19,981. For wage recipients, it was A$44,876.</p>
<p>The large representation of wage recipients in our sample shows that employment is no guarantee against financial hardship. Nor is educational attainment, with more than one third of wage recipients in our survey having a bachelor’s degree or higher.</p>
<h2>Tipping points for financial hardship</h2>
<p>We asked respondents about their experiences in the year before they fell behind with repayments. The most common experiences were unemployment and underemployment, as well as physical and mental health problems. Significantly less prevalent were factors such as gambling or alcohol and drug addiction.</p>
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<p>These results suggest financial hardship can affect anyone, regardless of how personally disciplined they are. </p>
<p>As one respondent told us: “I’m not badly off ($70,000 a year), but I’ve developed two autoimmune conditions on top of a preexisting neurological condition. Medication is expensive, and so are consultations with specialists […] I know how to manage my money, but there are more costs than money coming in […] It’s taught me not to judge people with money problems.”</p>
<h2>Less income, more hardship</h2>
<p>Falling behind with repayments was a stressful and isolating experience for our respondents, no matter their level of income.</p>
<p>But Centrelink recipients are far more vulnerable, as their incomes leave no margin for unexpected expenses. </p>
<p>“The reason we got in trouble was because the car broke down,” explained one respondent living on a Disability Support Pension. “It was just before Christmas, and all the bills came in together.”</p>
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<p>Respondents told us that being in debt negatively affected their health, relationships, community involvement, and ability to look for work or finish their education. </p>
<p>“It’s the anxiety,” said one respondent. “Not knowing from week to week whether the debts will all be able to be paid.” </p>
<h2>Coping by cutting down</h2>
<p>Most of our respondents sought to cope with their situation by reducing spending on food, recreation, utilities, medical care and transport. Just over a third borrowed money from family or friends. </p>
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<span class="attribution"><a class="source" href="https://datawrapper.dwcdn.net/USaYR/3/">datawrapper</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>Many wage recipients mentioned cutting down on “extravagances” such as restaurants, alcohol and take-away foods. However, higher proportions of Centrelink recipients were forced to cut down on essentials such as food, heating and medical care. </p>
<p>“I do not have any money for food,” said one respondent living on the Newstart Allowance. “I never thought we would be in this situation.” </p>
<h2>Assistance for low-income debtors</h2>
<p>Consumer protection laws allow Australians in financial hardship to negotiate moratoriums, payment plans and other arrangements (sometimes known as “<a href="http://www.ndh.org.au/Debt-solutions/Negotiate-payment-terms">hardship variations</a>”) with creditors including banks, energy, water and telecommunications companies. </p>
<p>But just a quarter of our respondents used these provisions to obtain a hardship arrangement from an energy or water company, and only 14.3% used them to obtain assistance from a bank or other credit provider. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/debt-agreements-and-how-to-avoid-unnecessary-debt-traps-84072">Debt agreements and how to avoid unnecessary debt traps</a>
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<p>It is also questionable whether low-income debtors benefit from such arrangements, which tend to be very short-term.</p>
<p>Our results indicate a need to broaden the accessibility of assistance for low-income debtors – for example, by increasing funding for free <a href="https://www.financialcounsellingaustralia.org.au/Corporate/Find-a-Counsellor">financial counselling</a> services.</p>
<p>Another measure, recommended by the <a href="https://www.acoss.org.au/wp-content/uploads/2018/09/DAE-Analysis-of-the-impact-of-raising-benefit-rates-FINAL-4-September-...-1.pdf">Australian Council of Social Service</a> <a href="http://ceda.com.au/Research-and-policy/All-CEDA-research/Research-catalogue/How-unequal-Insights-on-inequality">and</a> <a href="https://salvos.org.au/about-us/news-and-stories/media-newsroom/its-time-to-kick-start-newstart/">others</a>, is increasing the amount of Newstart and other Centrelink allowances.</p>
<p>Financial hardship can affect almost anyone. However, severe and ongoing debt problems are an inevitability for Australians whose incomes are simply too low to meet the cost of living.</p><img src="https://counter.theconversation.com/content/105296/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Evgenia Bourova is the Research Fellow for the Financial Hardship Project, which is funded by the Australian Research Council. </span></em></p><p class="fine-print"><em><span>Ian Ramsay receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Paul Ali receives funding from the Australian Research Council. </span></em></p>Australia’s first large-scale study on the experiences of people in financial hardship contradict the idea most debt problems are due to poor choices.Evgenia Bourova, Research Fellow (Financial Exclusion, Poor Insurer Practices and Consumer Protection Project), The University of MelbourneIan Ramsay, Emeritus Professor, Melbourne Law School, The University of MelbournePaul Ali, Associate professor, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.