Carlton's debt centre offers practical financial help
An "explosion" in ways to get credit is fuelling greater community need for debt help. The Carlton Debt Centre, which is run by St Jude's Church in partnership with Christians Against Poverty, is at the coalface.
April 26 2019Australia’s only Anglican debt centre – a partnership between St Jude’s Carlton and the debt management organisation Christians Against Poverty – could be joined by others as staff deal with an “explosion” in ways to get credit.
St Jude’s and Christians Against Poverty (CAP) started the Carlton Debt Centre in 2016, with funding from the City of Melbourne. The Melbourne Anglican Foundation provided a grant to the centre in 2018. The Diocese of Melbourne would like to explore the possibility of debt centres opening in other parishes.
Debt centres aim to get clients out of debt by establishing long-term payment plans and negotiating with creditors.
Rose Cook and Campbell Brice
One of the few debt centres in the inner suburbs, the centre has had 43 clients since it opened in 2016. In 2018 alone, it dealt with $171,000 in debt owed by eight clients.
“There’s been an explosion of new ways to get credit with apps such as Afterpay, as well as payday loans and short-term loans,” said Campbell Brice, administrative assistant with the debt centre. “They’re new and they’re not being regulated at the moment.”
“The debt situation in our community and further out is getting worse,” said Eve Almond, a volunteer with the centre. “We don’t deal with mortgage renegotiation, but as the housing market collapses, as people get chucked out of rental properties … it’s going to get worse.”
Ms Almond said that Bishop Brad Billings, in his correspondence with the centre over the MAF grant, had indicated his support of the debt centre concept.
“In the letter informing us that we had been successful in our application, Bishop Billings mentioned that he would like to explore the possibility of replicating the program in other parishes.”
Under the current model, St Jude’s identifies clients with debt problems and provides them with pastoral care; CAP is responsible for budgeting, financial advice, devising a financial plan and setting up a bank account to repay debt.
CAP also advocates on behalf of the client to the creditor and provides courses on financial advice, money management, addiction counselling, as well as job clubs.
Occasionally, and as a last resort, CAP will recommend a client declare bankruptcy.
CAP started in the UK in 1996 and has since spread overseas. It began in Australia in 2001.
In addition to loans, apps and credit cards, unpaid bills – such as court fines, utility bills, furniture and Netflix – are a common source of personal debt, said Mr Brice. CAP handles personal debt but not mortgage or business debt, he added.
There were usually triggers for debt problems, including a relationship breakdown or being sacked. “Something has happened which has meant they’ve either had to go into debt or the debt that they’ve had now becomes unmanageable.”
Carlton Debt Centre manager Rose Cook said that it usually took about a minimum time of about a month to process a client, which included three interviews.
The first visit is an introduction and explanation of the CAP model; the second is collecting a client’s paperwork and sending it to CAP; then third is discussing CAP solutions, which is usually a long-term payment plan, but occasionally bankruptcy.
“CAP don’t like someone paying back longer than four to five years, because it’s too long. It has to be a reasonable budget in a reasonable timeframe.”
For safety and ethical reasons, there’s always three people at an interview – the client, Ms Cook, and a support worker.
The gender of the support worker depends on the client, said Ms Cook. “The aim is that the support worker will be a friend to the client while they’re paying off the debt,” she said.
“Some of them have developed really lovely friendships where they have coffee every month or whatever.”
Ms Cook said a common question from clients was what a normal amount of debt was. “But there is no normal amount of debt,” she said.
“The lowest I’ve done is $3000. The highest I’ve done would have been about $80,000.”
Ms Cook and Mr Brice, both part-time, are the only paid staff of the centre. There are seven volunteers.
Ms Cook and Ms Almond attend the North Melbourne congregation of St Jude’s, while Mr Brice attends the Kensington congregation.
Ms Cook said that, traditionally, religious-based debt centres were affiliated with charismatic churches. Carlton Debt Centre was the first Anglican debt centre but CAP definitely wanted more, she said.
“The model of the local church doing the on-the-ground care at the micro level and then partnering with CAP really works,” she said.
The debt centre was started by the Revd Chris Mitchell who was a minister at St Jude’s Carlton at the time. Responsible for ministry on the Carlton public housing estates, Mr Mitchell encountered many people in debt and decided a debt centre would be a valuable ministry.
“Once we’d established there was a need and no, it wasn’t being met within our local area, we went to the City of Melbourne and we asked for a pilot study – a small grant to get us going,” said Ms Almond.
The City of Melbourne agreed to contribute $12,000 per year for the first two years, with extra funding and resources coming from St Jude’s. For 2018-19, the $12,000 came from the Melbourne Anglican Foundation.
At the time it opened, Carlton Debt Centre was the only one in Melbourne’s inner suburbs. Since then, LIFE church in North Melbourne has also opened a debt centre.
“There’s not a lot of centres in the inner suburbs,” said Ms Cook.
“Consequently, out of the 10 clients that were referred last year, only one lives in Carlton. And so we travel to them. We’ve had Elwood, Heidelberg, Footscray … all around.”
Unlike some commercial debt centres, Carlton debt centre does not charge its clients.
The Centre’s clients, said Mr Brice, tend to be victims of domestic violence and addiction, the unemployed, and low income earners. Many clients are single females. About one-quarter of clients are from CALD (culturally and linguistically diverse) backgrounds.
The centre also assists clients in dealing with Centrelink and obtaining Newstart.
Matthew, 37, told TMA he contacted the debt centre in January after amassing close to $9000 in debt.
A particular concern was a storage company who refused to release his furniture.
“I never got a receipt – they just increased their prices,” he said. “It was only when CAP got involved that they started negotiating terms and conditions and cut half off my debt.
“When I tried they didn’t even respond most of the time, or they said it wasn’t possible.”
Matthew said he ran into financial difficulty when clients of his web design business wouldn’t pay up. He moved to New Zealand in 2018 to be near his sister but a poorly-paid retail job at Bunnings and sky-high rents inflicted further damage on his finances.
“Most of my money went to rent and I couldn’t pay off my credit card,” he said. “I had to change jobs because public transport was so poor and that took months and months to eventuate.
“I thought this is enough. I was just living in squalor really.”
He returned to Australia last November, and eventually settled in Bundoora. He is still unemployed, although hoping to get a job with the military.
Here, again, CAP’s role was vital. “There would be no way I would be taken into that role if I had declared bankruptcy. No way I would even be considered.”
He was referred to CAP by a friend. His debt has been reduced to $7800 and his credit card debt has been changed to a personal loan.
“That was a big burden off my shoulders,” he said.
“CAP does help people because their negotiating power means you get some dignity back, some agency back, which is the most important thing.”
The official helpline for CAP is 1300 227 000, but Ms Cook said prospective clients could call Carlton Debt Centre directly on 0459 757 444.