Government proposals 'could help reduce debt problems'

New government plans could prevent those struggling with their finances from running up further debt, it has been claimed.

Government plans to change the Privacy Act could help prevent those Australians in significant amounts of debt from developing further money management problems, it has been suggested.

Under the Australian banking proposals, banks would be given full access to people's entire financial commitments - including bank accounts and saving accounts - upon receiving a request for credit.

Here, lenders will assess people's capacity to make repayments, something that could be particularly important for those already in a significant amount of debt, News.com.au reports.

"Without comprehensive reporting they won't be able to assess their level of indebtedness," Russell Evans, general manager for Veda, points out.

He adds that a significant number of people made bankrupt claim to have applied to borrow more money - which could include credit cards - despite already being aware they are in major money management problems.

Such comments as recent research by the firm revealed 21 per cent of Australians looking to apply for credit over the next six months are already struggling to service existing debt.

Posted by Mark Hornby