Financial Rights Legal Centre Solicitor Mark Holden and Aboriginal Services Coordinator Amanda Cameron frequently advise young people who have legal concerns around money they have borrowed.

They have some practical words of wisdom to share, from how to handle a scary phone call to why it’s important to speak to family about loans.

What are some of the common situations you see at the Financial Rights Legal Centre?

Amanda: We’re seeing young people increasingly taking out payday loans. It may start with $200 but can easily turn into $1000 or $1200 and before you know it it’s a debt trap.

Sometimes it can feel like the end of the world, but it’s not. We speak to them, tell them to get their documents together and then we work on a solution with the lending companies.

We’re also seeing people going for Afterpay, sometimes because there’s an expectation that when you get to the checkout you get a bonus. But if they don’t keep up with their payments, it can affect things like their Centrelink.

Receiving a phone call from a debt collector can be very frightening. What do you say to people who feel scared about answering the phone?

Mark: Phone calls can be very scary and so can envelopes. There is no harm, if you get a phone call, in asking ‘What is this about?’ Debt collectors have to provide details.

When clients get a call from debt collectors, they are very anxious, they are very scared. They might end up agreeing to what they’re saying on the spot. They could be agreeing to [surrender] something that may not be theirs in the first place.

It’s very important not to agree to anything (such as a debt repayment agreement) on the spot, but to ask for more details about it.

They can also speak to a lawyer or financial counsellor before continuing the conversation.

What if you don’t know what to do or how to repay a loan?

Amanda: A local financial counsellor or Mob Strong Debt Help (1800 808 488) can help to work out a plan. The first step is to gather some of the documents from the situation and then make a phone call.

Should family be involved?

Amanda: Sometimes people feel shame about debt, but it’s OK to talk about these financial issues with family.

Mark: We often have this desire to help our family and kin out, but letting family know can make it easier to get through these situations. They may be able to help. Sometimes we have family speak to us too about a plan.

What if someone feels ashamed?

Amanda: These situations do affect young people’s mental health, but I want to stress there’s no shame in it. It can happen to anybody! We want to break down the stigma about that.

Getting help

If you are in trouble due to loans or debt, support is available.

– Mob Strong Debt Help 1800 808 488
– National Debt Helpline – legal and financial counselling: 1800 007 007
– Find a financial counsellor https://moneysmart.gov.au/managing-debt/financial-counselling

Amanda Cameron is an Aboriginal Services Coordinator and Mark Holden is a solicitor with the Financial Rights Legal Centre. This is an edited transcript of a conversation with Kate Cowling and is not a substitute for tailored legal or financial advice.