Financial hardship: What can I do if I am having difficulty paying my loan or lease payments?
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Key points:
- if you cannot pay your loan or lease because you are in financial difficulty (hardship) you may have the right to have your payments reduced, or changed in some other way.
- this information is intended for Victorian consumers who have entered into a loan or lease that was for a personal, domestic or household (not business or investment purposes) purpose.
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Your right to apply for financial hardship assistance
There are a number of laws that give you the right to apply for hardship assistance from the company your loan or lease is with. How these laws apply to your circumstances will depend on things like when you entered into the contract, how much your loan was for, what Code of Practice your lender belongs to and what your contract says. However, most consumers should be able to get hardship assistance by following the steps set out below.
Step 1: Assess what changes you need to your contract
It is important that you work out what changes to the repayments will help you deal with your hardship but also ensure the loan or lease is eventually paid. Interest will continue to be added to your account. A free financial counsellor can assist you to work out your options. Contact MoneyHelp on 1800 007 007.
You may have other legal rights which may be more appropriate for you, such as:
- any rights you have in relation to payment of the loan under an insurance policy;
- a reduction to the loan on the basis that you were ‘overcommitted’; and/ or
- an entitlement to a temporary or permanent disability payment or other compensation for an injury or unfair dismissal. A financial counsellor will be able to assist you in obtaining legal advice if it appears you have other rights. You must act quickly as time limits apply.
Step 2: Contact your credit provider
If you don’t think you can meet your repayments under your loan or lease you must inform the lender or lessor of your difficulties. It is best to notify the lender or lessor in writing, and keep a copy of your letter. That way you will have proof that you did so. A template letter is available here.
The lender or lessor must work with you to help you overcome your repayment difficulties by, for example, changing the repayments in some way, stopping the repayments for a period of time or changing your obligations under the contract in a way that will assist you to repay the loan.
Step 3: Give your credit provider further information if they request it
It is important that you respond to any request by the credit provider for more information quickly as time limits apply. If you are having difficulty understanding what the lender or lessor want or how you should reply, get help. Call a free financial counsellor at MoneyHelp on 1800 007 007.
Step 4: Make a free complaint to the Credit and Investments Ombudsman or Financial Ombudsman Service
If the lender or lessor:
- refuses to assist you;
- offers to help in a way that will not assist you in repaying the loan or lease; or
- fails to respond to your request within 21 days,
you have the right to lodge a complaint with a free, independent external dispute resolution (EDR) scheme, the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO). The EDR scheme will investigate your complaint and can order the lender or lessor to change your repayments in a way that will enable you to repay the loan or lease. Your lender or lessor must be a member of either FOS or CIO.
You also have the right to apply to a court for hardship assistance. Because this can be complex, it would be sensible to get legal advice first to avoid unnecessary costs.
More information & trouble shooting tips
For more information about applying for hardship, go to:
You may also like to read our factsheet on overcoming common problems when applying for hardship.
If you have loans or leases for a small business or investment purpose, you may still have rights to get your repayments changed on the basis of hardship. For more information go to the websites listed to above.
Consumer Action Law Centre
Legal advice: (03) 9629 6300, or 1800 466 477 for country callers.
Email: advice@consumeraction.org.au
If you are deaf or have a hearing or speech impairment, you can call through the National Relay Service (NRS):
- TTY users can phone 133677 then ask for 1800 466 477
- Speak & Listen (speech-to-speech) users can phone 1300 555 727 then ask for 1800 466 477
- Internet relay users can connect to NRS on www.relayservice.com.au then ask for 1800 466 477
Moneyhelp
Financial counselling: 1800 007 007
www.moneyhelp.org.au
Warning: This advice is for information only and should not be relied upon as legal advice. This information applies only in Victoria, Australia and was updated on 31 December 2015.
