Making a hardship application
A borrower has the right to ask for a change to their consumer credit contract, if they meet the following criteria:
the borrower has suffered a hardship they couldn’t reasonably have seen coming, such as illness or injury, loss of employment, the end of a relationship, or death of a partner or spouse
as a result of that hardship, the borrower cannot reasonably meet their debt repayments, and
the borrower believes they would be able to meet their debt repayments if the contract was changed in the ways specified by the CCCF Act.
Conditions for applying for hardship
A borrower can make a hardship application at any time, unless the borrower:
has been in default for two months or more
has been in default for two weeks or more after receiving a repossession warning notice or Property Law Act notice, or
has failed to make four or more consecutive debt repayments on their due dates.
Borrowers may only make one hardship application on the same grounds within any four month period, unless the lender agrees to consider another application.
If the borrower catches up on the debt repayments and defaults, they are again entitled to make a hardship application.
Types of application
A borrower can ask for a contract to be changed by either:
extending the term of the contract and reducing the amount of each payment, or
postponing debt repayments for a specified period of time (a payment holiday), or
extending the term of the contract and postponing debt repayments for a specified period of time (a payment holiday).
While these options will provide temporary relief, they are likely to increase the total amount owing on a loan.
The borrower cannot seek changes that are more extensive than is necessary to enable them to reasonably meet their obligations under the credit contract. The changes asked for must also be fair and reasonable to both the borrower and the lender when all the circumstances are taken into account.
How to apply
The application must:
be in writing and
be given to MoneyShop Group Ltd and
specify the reasonable cause for the borrower’s inability to meet their obligations under the consumer credit contract. The application mustinclude supporting information, such as a letter advising redundancy or a doctor’s certificate.
The application must include the specific changes the borrower wants to make
The borrower and lender must agree to the changes before a borrower is permitted to make any changes to the borrower’s repayments.
After making an application the borrower may not make another application in relation to the same consumer credit contract unless four months have expired since the previous application was made
We will only agree to consider another application within four months if the reasons for the application are materially different from the reasons given in the previous application.
What we will do with your application
We will consider the application in a careful, diligent and skilful way. We will also treat the borrower reasonably and in an ethical manner.
On receipt of the application we will:
Send a written receipt or acknowledgement to the borrower within 5 working days of receiving the application.
Send a written request to the borrower for any further information necessary to decide the application within 10 working days of receiving the application.
If we do not request further information, we will decide whether or not to agree to the changes and notify the borrower (in writing) of the decision, within 20 working days of receiving the application.
If we have not agreed to the changes, we will advise the borrower of the reasons for the decision in writing. Whether we accept or decline the hardship application the borrower has the right to seek a review of the hardship application by either the courts or Financial Services Complaints Ltd (FSCL).
If we agree to change the contract, we will provide the borrower with information about the change before the change takes effect.
If we request further information from the borrower, we will decide whether or not to agree to the changes by the later of:
- 20 working days after making the request for further information, or
- 10 working days after receiving the information requested.
We will not charge a credit fee for receiving a hardship application. However, if the application is successful and the contract is changed, we may charge a fee for the variation as set out in the contract and disclosed to the borrower. We will not increase the interest rate.
The fee will be reasonable and will reflect actual costs incurred by us in documenting the changes to the contract (excluding the cost of dealing with the hardship application).
If a consumer credit contract is secured over consumer goods, we will not take enforcement action in relation to those goods while we are considering a hardship application including:
giving a repossession warning notice, or
repossessing consumer goods or entering premises for the purpose of repossession.
A borrower can make a hardship application up to two weeks after receiving a repossession warning notice or Property Law Act notice. However we may repossess consumer goods while we are considering a hardship application if the goods are at risk. But we will not take any further enforcement action until the hardship application has been decided.