Financial Hardship


Are you in Financial Hardship?

Are you finding it difficult to make your payments?
Are you struggling each month to meet you loans?
What can you do if you are having difficulties in making repayments?

You're not on your own as there are rules, guidelines and regulations that may assist you if you are in financial difficulty.

If you are having difficulty in making your loan repayments then you may be able to change your repayments on the grounds of hardship under section 72 of the Credit Law.

As a consumer you have a rights under the Credit Law to access repayment arrangements because you are in financial difficulty.

If you are in financial difficulty because you were given a loan you could not afford when it was given you should seek advice on whether you have a case for an unjust contract.

When you ask for hardship assistance from your creditor you should:
• Tell them that you are in financial hardship.
• Explain what has put you in financial hardship.
• Make sure you have a proposal to address the situation, it is really important that you have a plan.
• Make sure you keep details of the phone conversation including the name if of who you talked to, what happened, the date and the time.
• Ask to be referred to the financial hardship team (if there is one).
• Don’t agree to arrangements you cannot afford— If the arrangement being offered won’t work for you then consider writing to the credit provider or get advice.

To be eligible for assistance from your creditor:

The Credit Law must apply to your loan as follows. If you are unsure about this you can contact Financial Rights Legal Centre or phone 1800 007 007.
• You must be unable to pay because of illness, unemployment or other "reasonable cause".
• You must show that if the variation is granted you will be able to repay your loan within a reasonable time.
• A hardship variation can be made at any time but preferably before court proceedings have commenced. If court proceedings have commenced you should get urgent legal advice.
• Your loan (or credit limit) must be under a certain amount (threshold):
a) $500,000 (if entered into after 1 July 2010).
b) If loan entered into before 1 July 2010 a floating threshold applies As at 29 March 2010, the applicable threshold was $350,240. The current threshold is available at:

NOTE: if your loan is over the threshold you can still get help through External Dispute Resolution (EDR).
Since the New Credit Law came in you have access to help even if the creditor says that you can’t get help or you loan is not covered by the hardship provisions or is over the threshold.

You have a right to go to the independent umpire under External Dispute Resolution (EDR). Depending on who your loan is with this will be either (click on the link below):

o Financial Ombudsman Service (FOS)
o Credit Ombudsman Service Limited (COSL)

If you are in financial difficulty you should immediately contact your credit provider.
If you get no satisfaction, that takes your circumstances into consideration, the you should seek help from a financial counsellor, community worker, community legal centre or credit lawyer.

The Financial Rights Legal Centre in NSW has produced a series of useful fact sheets including one on financial hardship Tel: 1800 007 007.