``You might find that you have overcommitted yourself or that your circumstances have changed and you can no longer afford the repayments.

``If this happens, it's important that you don't ignore the problem and hope that it goes away because it won't,'' the OFT says.

It recommends contacting the lender as soon as possible to try to come to some sort of arrangement.

``They may agree to reduce your repayments and extend the term of the loan or postpone repayments for a certain period of time. Sometimes they will agree to a combination of both.

``If the lender agrees to change your repayment plan to make it easier to pay the loan it's essential that you get it in writing and file it away.

``If you feel that you still won't be able to repay the loan, it might be time to get advice from a financial counsellor.''

The Credit (Home Finance Contracts) Act 1984 also provides a facility for debtors who face temporary hardship in making mortgage repayments to seek a variation to their loan contract.

Homeowners must first apply to the credit provider for a variation of the contract. However, if the credit provider refuses to vary the contract, they may apply to the OFT for assistance in negotiating a variation of the contract.

If a family is under mortgage stress it is also possible to access short-term assistance from the Department of Housing's mortgage assistance scheme.

The scheme applies to homeowners who are having trouble making home-loan repayments as a result of an unavoidable change in their circumstances.

The assistance is not a grant, but a loan to be repaid at a future time (For details call 1800 806 653 or 9821 6111. Website: www.housing.nsw.gov.au).

The OFT stresses that taking action early on is the most important thing people can do if they see that they might soon have financial difficulties.

``You don't need to be up to your eyeballs in debt to get help from a financial counsellor,'' the office said.

``They can help you work out a budget and sort out your finances. They give free, confidential advice and are available through the Credit and Debt Hotline on 1800 808 488.

``You can also find them through some neighbourhood centres, community legal centres, church groups and charitable organisations.''

Community financial counsellors provide free help for people with debt difficulties. They operate throughout New South Wales and provide confidential advice on financial matters.

Trained counsellors can provide options for changing and improving people's financial situation. They can explain what government assistance is available and negotiate, advocate or mediate, on behalf of people in trouble, with credit providers and government agencies.

Financial counsellors can also assist with information on debt recovery, bankruptcy and other para-legal matters, as well as ensure appropriate referral to other sources of assistance, for example Legal Aid, personal counselling and government services.

Meanwhile, the State Governments Legal Aid Office provides a free 15-minute interview for people with credit/debt problems, providing advice and determining if there is a need for further assistance. Details: 1300 888 529 or www.legalaid.nsw.gov.au.

The Consumer Credit Legal Centre also specialises in credit/debt matters. For legal advice call 9212 4111 or visit the website: www.cclcnsw.org.au.