A survey of the nation's financial counsellors has shown 92 per cent of them believe clients will be lumped with unaffordable debt if safe lending laws are scrapped.
The survey, by Financial Counselling Australia, found a repeal of the responsible lending laws by the Australian Parliament will be harmful to families and the broader community.
A report from the organisation based on the survey stated a number of financial counsellors said suicide was a real risk for people affected by unaffordable debt.
"Relationship and family break ups are also a key concern," it said.
"Increased bankruptcies, loss of housing, poverty and a higher demand for emergency relief were all listed as likely impacts."
Under the National Consumer Credit Protection Act, financial counsellors are able to seek redress for clients who experience irresponsible lending.
However, if the laws are axed, financial counsellors will find it harder to provide such assistance.
Financial counsellors have identified people with disabilities, the elderly, immigrants, Centrelink recipients, family violence victims, and people with addictions as the most likely people to be exposed to unsafe lending practices. Of the Tasmanian examples of unsafe lending in the survey, one client on a disability pension ran up $10,000 debt on a credit card in two days.
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In another scenario, one financial institution took over a property loan from another financial institution.
The property was revalued at a loss of $3 million.
The client was then expected to come up with $2 million within six weeks to service the loan.
The laws were introduced following the American subprime loan crisis.
In introducing the repeal bill, Treasurer Josh Fryenberg said the reform increase credit flow to households and businesses.
He said it was important there were no unnecessary barriers to credit flow as the country recovered from the coronavirus pandemic.