When a car accident decimated his finances, Royce began investigating Australia’s ‘debt trap’
Royce Kurmelovs swears no cars came.
But there was. He hit her.
His car sped over three lanes of traffic.
“It was a perfectly ordinary day to be frank enough and it was also maybe one of the worst of my life,” he says.
The crash would push his personal finances to the brink, open his eyes to our complicated relationship with money, and ultimately… see him write a book about debt, in part to get out of it.
Fortunately, nobody was hurt. Then the conversation turned to money.
A policeman asked hopefully: Did he have insurance?
He didn’t and the new Mazda he hit was a loss in value.
“I was on the hook for everything,” Royce tells the ABC RN Saturday Extra.
The Adelaide-based freelance journalist and author says he always finds it difficult and embarrassing to explain why he was uninsured.
When he started out as a “insecure” freelance writer, he had to make decisions about what he could and couldn’t afford.
But over the years and he’s finally been able to afford insurance, he still hasn’t signed up.
“And so I was caught off guard,” he says.
“A lot of people are in similar situations. With car accidents, in particular, people sometimes miss a payment or forget to renew their coverage. Something is happening in their life and people just don’t register. .
“Then something’s wrong and you end up in a mess. “
He thinks the embarrassment he felt has a lot to do with how our society views debt.
“The way we talk and think about debt has an incredibly long history… there is a sense of guilt associated with it that is ingrained in our language.”
He says it is absurd to expect everyone to be able to manage their personal finances perfectly.
“It’s not always possible to run your financial affairs like you’re an accountant,” he says.
“My experience and the experience of the people I spoke to in the book was this sense of frustration that a little mistake can be so costly.”
The cost of Royce’s mistake was going to be $ 25,000.
Who would be wipe out his savings – a safety net he relied on as a freelance writer living check-to-check.
Then came knocking on his door of a debt collector.
Suddenly faced with navigating the debt industry, Royce decided he should write about it.
“I’m a journalist. So the best way for me to pay my bills is to write about stuff,” he says.
The resulting book, Just Money, explores the “Great Australian Debt Trap” and how class, power and the effects of “financialization” in the 1980s shape our relationship with money.
“Overwhelmed and ashamed”
Katherine Temple of the Consumer Action Law Center says the organization is often approached by people who are really struggling with debt.
“They don’t know who to turn to, they feel very overwhelmed and ashamed,” she says.
“It can have a huge impact on the mental well-being of people and their relationships.”
Katherine is blunt – Australia has a debt problem.
“Even just listening to the rhetoric around COVID. It’s about having to ‘keep the flow of credit going to keep the economy going’, without really recognizing that unaffordable debt won’t help get our economy back on track.” , she says.
“It kicks the box down the road and it’s been the approach to debt for a long time – ultimately this unaffordable debt is catching up with people.”
She says we need to stop blaming the people who are doing their best in a complex financial system and start taking a critical look at the behavior of lenders, especially as the effects of the coronavirus are felt.
“We’ve seen a lot of marketing from short-term lenders, with some even suggesting that they are offering ‘COVID relief loans’, which is obviously very problematic,” she says.
“We’ve also seen a lot of marketing from unregulated debt consulting firms offering quick fixes to debt problems, which really don’t tend to deliver on their promises.”
An imbalance of power
As he researched his book and tried to get out of a debt spiral, Royce found he was better equipped than most.
The reporter knew he needed advice. He needed to ask questions, “even silly questions”, to determine what his options were.
“For a lot of people, you don’t have the information. You don’t know where to go.”
He was also grateful for his law degree.
“It gave me the skills and abilities to be able to handle this situation – other people may not be so lucky,” he says.
When the documents arrived with photos of a completely different car than the one he hit, he was able to push back and force the company to prove the debt figure was correct.
“From that basis, I was able to negotiate over time with the company and sort of lengthen the process a bit to give me time to recover, prepare and plan, which a lot of people do when I do. ‘they’re dealing with the debt industry because it’s a very scary thing. “
Royce also spent time with debt collectors, who he said were generally nice and interesting people – not all of them big, muscular guys with tattoos.
But he says having someone at your door to ask questions always creates a fundamental power imbalance.
“When it comes to getting the job done, debt collectors are masters of the understatement,” he says.
“They have a way of speaking that delivers a message without saying it.”
He says many of them see themselves as legal agents who gather evidence.
They will usually ask questions and if someone lies or panics and says something wrong, the debt collector can be called as a witness later in court if he refuses to pay.
Katherine agrees that there is a power imbalance around debt.
“People often feel helpless when talking to their lenders. But the important thing is that people realize that they have rights and that lenders have responsibilities in the way they treat people, ”she says.
There are options available for those struggling with debt, including hardship arrangements and support programs.
But she says the first step – which can be very difficult – is to ask for help.
“My advice would be to call the National Debt Helpline talk to a financial advisor if you’re worried about your debts, ”says Katherine.
“They are free, independent and can provide you with personalized advice on the best options for you. “
Katherine says while JobSeeker and JobKeeper payments have allowed some people to pay off their debts or put them in savings, the worry is what happens when they are liquidated.
“The payday loan industry is gearing up to really take advantage of this financial cliff that we are approaching and we are really worried about what we’re going to see once that happens.”
After a long and drawn-out process, Royce was able to reach a settlement with the company.
He still pays off the debt month by month, even though he managed to reduce it to $ 20,000. He also has an HECS debt of around $ 40,000.
He is working hard to try to move forward.
“It’s part of the debt experience for a lot of people. When you have these kinds of bills and these kinds of payments, you end up in a situation where you work harder, work longer, with little to show, ”he says.
“It’s the kind of universal experience when people are tense by [the weight of] their obligations. “
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