Chronic consumer debtors: the need for specific intervention

Many studies of consumer debtors have identified risk factors associated with chronic consumer debt. Chronic consumer debtors exist in an environment of ongoing efforts to survive financially and meet their debt commitments. Despite otherwise favourable economic conditions for the community at large such as low interest rates and low levels of unemployment, the chronic consumer debtor remains continuously at peril of overcommitment. An analysis of financial counselling interviews in New South Wales (the largest state in Australia) has been used to identify the group that the authors believe to be most at risk of chronic consumer debt in Australia. Other independent studies are provided to support the choice of the identified group. The situation for chronic consumer debtors is contrasted to the situation for acute cases. While financial literacy and support programmes can be provided to the community, the ability to target programmes towards a specifically identifiable group concentrates activities on measures aimed to alleviate the distress caused by ongoing financial hardship for one particular consumer group. The challenge of reducing chronic consumer debt has the potential to raise awareness and understanding of risk factors for consumer debtors generally. Thus, concentrated efforts towards alleviating chronic consumer debt may lead to a reduction in consumer financial overcommitment.