Help is at hand for those whose finances are hanging in the balance — but it's best not to wait that long.

Financial counselling, traditionally delivered face-to-face, is now being offered by phone as agencies seek to cope with a surge in demand that they don't expect to abate any time soon - global financial crisis or not.

In Victoria, the State Government has launched the MoneyHelp financial counselling call centre, targeting people who have lost their jobs or had their hours reduced.

Managed by the Consumer Action Law Centre (CALC), MoneyHelp also has a self-service website (see moneyhelp .org.au) that offers tools and advice about what to do if you lose your job or are struggling with bills and debts.

In Canberra, the community-based Care Inc Financial Counselling Service offers a limited-hours telephone service, while an after-hours drop-in program supplements its appointment-based program, for which there's a waiting list. (It also has information on budgeting tools at http://www.carefcs.org.)

The director of Care, Carmel Franklin, says that in Care's just-released annual report demand for its services remains high and increased inquiries about bankruptcy are "an indicator of the level of financial stress being felt in the community".

About 22 per cent of contacts in the six months to June 30 were from people seeking information about bankruptcy, compared with 9 per cent in the same period a year earlier.

Care Inc's Queanbeyan centre also reported an increase in clients on higher incomes seeking help in applying for hardship variations on loans and in lenders directly referring clients to the service.

The co-chief executive of CALC, Carolyn Bond, says many people will still need face-to-face counselling but MoneyHelp (1800 149 689) can help those in immediate need - those with a debt collector on the doorstep, for instance - and people who might be able to take action themselves after being given a little guidance. "If they have more complex issues, they can be referred to one of the financial counselling services so they can sit and talk with someone," she says.

The client services co-ordinator of Care Inc, Liisa Wallace, says requests for help have been rising strongly for three or four years - not merely with the advent of the global financial crisis.

"And it's not so much the number but also the complexity of the issues that is troubling," Wallace says.

She cites clients who have come to the centre with perhaps five or six credit cards that are "completely maxed out" after using one card to pay off another, then repeating the process until they reach the point where they can't do it any more.

"They'll often have a personal loan as well and be behind with the rent," she says. "People have access to these products too easily still.

"Their capacity to repay is not being assessed adequately by financial institutions. That, to me, is really fundamental to this."

Care Inc books appointments only two weeks ahead, is always booked out and has people queueing for three to four weeks for a slot to come up, unless their need is so urgent that the centre gives them priority.

Wallace says the service is encountering people who have never found themselves in this sort of difficulty before, such as IT workers who have been made redundant or not had contracts renewed.

"They have a lifestyle that, understandably, factors in their current income," Wallace says. "Suddenly they don't have that income any more."

One of the biggest problems for financial counselling services - and even for agencies such as the credit ombudsman - is that people are not seeking help early enough.

"Unfortunately, we get quite a few calls from people where they are so far in mortgage arrears that, in fact, there's almost nothing that can be done," Bond says. "There are so many debts - they are so overcommitted - that, really, they have to consider the option of selling their home or looking at bankruptcy."

Seek help early and there may still be options, such as negotiating a revised repayment schedule, an extension of time, a reduced interest rate or a moratorium on the debt for a period. Wallace argues that credit providers should also be proactive in identifying people who are struggling and offering them options to deal with hardship.

Credit Ombudsman Raj Venga says one-third of the 1064 complaints his office handled last year were about applications for hardship variations. About 90 per cent of those contacts came after the lender had already issued a default notice and, in many of the cases, after the arrival of a last-stop statement of claim. A default notice requires borrowers to come up to date with payments within 30 days. If they fail to do so, a statement of claim is issued calling in the entire loan, in which case borrowers are about to lose their homes.

"Reputable lenders will not be fast in issuing a default notice - someone will have been in arrears for a long time," Venga says. But why don't people act before this point? "People are burying their heads in the sand ... and perhaps there's not enough understanding of the legal context," he says.

"But the reality is, lenders can offer more options if arrears have not accumulated."

Venga notes, however, that a hardship variation is available only when the situation is expected to be temporary. If someone won't return to work for a long time - because of injury, perhaps - there are fewer alternatives.

Bond says that when it comes to redundancy, people should not make hasty or overly optimistic decisions about what to do with any severance payment they receive.

"We have had three calls in the past couple of days from people who received a redundancy payment, spent it or put it on the mortgage, then found out that they couldn't get a job," Bond says.

Centrelink assumes you can live on your redundancy payment for a time, she says, and has a formula by which it calculates a "preclusion" or "income maintenance" period, during which you can't receive benefits.

"These people thought they were doing the right thing by paying off the mortgage but now they've got zero income, living expenses to meet and perhaps other debt commitments," Bond says. Bond, Wallace and Venga all say they don't expect the high demand for their services to be temporary.

"A lot of people think we have ridden through the crisis easily but there are certainly areas where there has been an impact and there will continue to be an impact," Bond says.

Wallace says some victims of the crisis haven't surfaced yet because they're still living off a redundancy payout or their own resources.

"The profile of the financial crisis means there will be more demand in the future," she says.

"We don't actually anticipate a slight increase, we expect a great increase over the next 12 months."

Key points

Call centres and drop-in nights are dealing with demand for financial counselling.

There is concern that people in hardship are seeking help too late.

Requests for information about bankruptcy have jumped.

Many are unaware of Centrelink rules on redundancy payouts.

Counselling services expect more people to come forward this year.

What to do

Contact your creditors immediately. Explain your situation and request a hardship variation.

If creditors are unreasonable or threatening, get advice. Know your rights when negotiating.

Prepare an income and expenditure statement. Identify cuts or surplus funds that could be offered to creditors.

Confirm your request in writing. Include the income and expenditure statement, ask for interest to be suppressed during the variation and be specific about a time frame for the variation.

If you can afford it, offer to continue making repayments (even if at a greatly reduced rate) to show your willingness to pay the debt.

Tell your creditors of any progress; never ignore their letters or phone calls.

If you receive any correspondence you don't understand, immediately talk to a financial counselling service such as MoneyHelp.

If legal action is threatened or pending, speak to a community legal centre or financial counsellor straight away.

If you're on a low income and don't own any assets (such as a house), bankruptcy may be an option — a financial counsellor can help you with this.

Source: MoneyHelp