HARDSHIP OPTIONS

It is likely that a borrower will encounter a significant change in their financial circumstances at least once during a loan.

Financial hardship may be caused by  increases  in interest rates  or  changes  such  as  family  break-up,  death  of  a spouse, workplace injury, unemployment or illness.

This Guide provides some basic information about what you can do if you are in financial hardship.

What should I do if I’m in financial hardship?

If you are finding it difficult to meet your loan payments or if you have received a default notice from your lender, you should contact your lender as soon as possible to discuss your situation.  Your lender usually has more options when approached early.

You can ask your lender to vary your loan payments and “stay” (hold or postpone) legal proceedings when you are in financial difficulties. However, you should make what payments you can in the meantime.

You should also seek advice from a qualified and experienced source.

What can a lender agree to?

The lender may agree to:

·       extend the term of your loan and reduce your payments;

·       postpone your payments for some time;

·       extend the term of the loan and   postpone some payments;

·       convert your loan to an interest-only loan for a period of time;

·       reduce the interest rate on your loan for a period of time; or

·       any other  reasonable  proposal  that  enables  you  to eventually repay the loan.

If  your  lender  offers  you  a  payment  arrangement  that you are not  sure  you  can  afford,  be  very  careful  about accepting  it. If  you  do  and  then can not  meet  the  new payments, it may be difficult to later ask  your  lender for another payment arrangement.

What if the lender has declined my application for financial hardship assistance?

If the lender declines your application:

·       it must write to you and set out its  decision and the reasons for its decision;

·       you can lodge a complaint with the Financial Ombudsman that all lenders must be members of.

Along with the Hardship options above, You also have the following options available.

The INSOL OFFER

The "INSOL OFFER" is short for Insolvency Offer. This is when you acknowledge that you are insolvent (unable to pay your debts) and an offer is put to your creditor/s to accept a lump sum payment of less than you owe to clear your debts. You may have one creditor or you may have many creditors.

The money you offer could be your savings or it could be money that a family member or friend is prepared to give or loan to you.

NEGOTIATED ARRANGEMENTS

This is where an agreement is reached with your creditor/s to accept something different than the current agreement. It is not dependant on a Hardship provision. Unlike a Debt Agreement the change will probably not be legally binding on the creditor.

Depending on your situation a negotiated arrangement might work.

Call us for help with any of the above options or choices if you think they may help you.

BANKRUPTCY

If all other options have been exhausted you may need to consider voluntary bankruptcy. Click on the following link to be taken to a bankruptcy information site. click for Bankruptcy Information