New product to clear outstanding credit defaults

Clear Name gives people a chance to pay off unpaid defaults online and at their own discretion. Creditsimple.com.au CEO David Scognamiglio said that Clear Name was designed to give people the tools to manage their unpaid defaults themselves.

A default happens when a payment to a credit account is at least 60 days overdue.

“We reckon Aussies deserve the best shot at living a healthy financial life, and we’re calling on all credit providers to sign up to Clear Name so more people can benefit from this service,” Mr Scognamiglio said.

“It takes just one missed payment to affect your credit score, which means it may be harder to get credit in the future — and that’s often just when you need it most,” Mr Scognamiglio said. “Having unpaid debt can create huge stress for people, so we built Clear Name to help consumers manage their debt position and pay their defaults in a private and hassle-free way.

“We believe Clear Name changes the way consumers pay defaults by giving the control back to consumers, empowering them with access to a discount and to clear their unpaid defaults once and for all.”

People will be able to use Clear Name through the Creditsimple.com.au site for free with no obligation at any time.

Research commissioned by Creditsimple.com.au found that 50.8 per cent of people are personally impacted by debt defaults and 26.9 per cent say debt affects their family. Many Aussies find it difficult to get credit after they’ve had a debt go to a debt collector — 44.6 per cent couldn’t get a loan; 18.7 per cent couldn’t get a mobile phone on contract; 11.5 per cent found it difficult to get an essential service, such as electricity, gas or home phone.

Many cut back on essential purchases such as food, education or housing (52.6 per cent) and 51.6 per cent cut back on non-essential purchases, such as entertainment or drinks; 27.3 per cent found themselves in a position where they had to sell something to clear the debt.

Facing up to the debt as soon as you know you have it is the best way to go, Mr Scognamiglio said.

“It’s easy to stick your head in the sand when you can’t pay a bill, or if you’ve forgotten about it and suddenly had a sharp reminder. But leaving all those envelopes unopened or sneaking around to avoid the debt collector isn’t going to make your money problems go away. Leaving it just makes the situation worse. The only way for things to get better is to take action.

“It’s also clear that having unpaid debt really stresses out a lot of Aussies. We asked people about their motivation for paying off the debt, and while many simply didn’t want the money owing in their name (62.6 per cent), there’s a big chunk of people who knew their credit history would be affected (44.6 per cent) and they wanted to avoid having a black mark on their credit file. Meanwhile, 39.1 per cent of people found the situation stressful and wanted to resolve it to reduce the stress.”