Financial hardship arrangements or loan variation

Eligibility for Applying for Financial Hardship

You may be eligible for Financial Hardship due to:

• Illness
• Unemployment, or
• Other reasonable causes

If these circumstances apply, you should consider immediately applying to your creditors for Financial Hardship Arrangement

Hardship Variation

You are eligible to apply for hardship variation if the Consumer Credit Code applies to your contract, that is -

• Credit has been provided to you
• A credit charge (interest) has been levied
• Your credit is for personal use only
• Court proceedings have not been commenced

If you cannot keep up your debt repayments, you should contact your creditor/s as soon as possible

Varying Loan or Credit Card Payments on Financial Hardship Grounds

Most creditors will approve Financial Hardship arrangements if the consumer can verify their financial situation, for 3-6mths.

Tell your creditor that you are having financial hardship difficulties and want to discuss your current repayment arrangements.

It is important you offer to pay what you can really afford, making sure you can offer something to all your creditors. Take the time to work out what your cost of living is and where you can cut back on other expenses so you know what you can realistically afford to repay your creditors.

If you can't afford to pay anything, then request a 3-6mth moratorium, (cease all payments for a period of time, interest must be ceased in this situation).

Before agreeing to a repayment variation, your creditor may want details of your income and expenses, together with supporting documentation such as medical reports, income statements, verification of other debts, etc. They may send you a Statement of Position form for you to complete.

With any variation of paymetn it is important for your own protection that you ask your creditors to:

• Stop charging interest for this period of Time, or
• Reduce the interest on the debt to an acceptable level.

This is necessary so the debt does not blow out of control during this period and you can reasonable service the debt when you temporary arrangements expires.  Also, if due to your financial circumstances you have received penalty fees for late payments or for being over your credit limit, that these fees be reversed or waivered.

• If you do reach an agreement, ask the creditor to confirm in writing:
• When the agreements commence and cease
• What the new repayment amount is and when it's to be paid
• If any penalty fees have been waivered.

Once an agreement has been agreed to it is very important that you, the debtor, do not default on the varied payment arrangement otherwise the creditor has the right to revoke the variation and pursue collection of the debt if they wish.

In some circumstances the creditor may consider long term arrangements.