WHAT TO DO IF YOU SUFFER UNFORESEEN HARDSHIP – CONSUMER CREDIT CONTRACTS
Making an application
If your loan contract is a Consumer Credit Contract then if you are unable reasonably to keep up your payments or other obligations during the term of the loan because of illness, injury, loss of employment, the end of a relationship, or other reasonable cause, you may be able to apply to Southern Cross Financial Group (“SCFG”) for a hardship variation.
Your loan contract will be a Consumer Credit Contract where the purpose of the loan was wholly or predominantly for personal, domestic, or household purposes unless you, as the borrower, are a trust or a company. If you do not know whether or not your loan is a consumer credit contract then please ask SCFG or your lawyer.
To apply for a hardship variation, you need to:
- make an application in writing; and
- explain your reason(s) for the application; and
- request one of the following:
- an extension of the term of the contract; or
- a postponement of the dates on which payments are due under the contract (specify the period for which you want this to apply); or
- both of the above; and
- give the application to the SCFG.
Do this as soon as possible. If you leave it for too long, SCFG may not have to consider your application.
You can make an application as long as you have not:
- Been in default for two months or more; or
- Been in default for two weeks or more after receiving a notice under the Property Law Act; or
- Failed to make four or more consecutive periodic payments on their due dates, and these missed payments have not been caught up.
What SCFG will do
In the event SCFG receives a hardship application from you, then SCFG will:
- Within 5 working days, send a written receipt or acknowledgement to you;
- Within 10 working days after receiving the application, send a written request to you for any further information relevant to the application;
- Within 20 working days after receiving the application, in accordance with the lender responsibility principles, decide whether or not to agree to the changes requested, notify you (in writing) and, if SCFG has not agreed to the changes requested advise you of the reasons for that decision together with a clear summary of you rights.
If SCFG has requested further information from you, the timeframe for making the hardship changes is the later of 20 working days after making the request for information or 10 working days after receiving the further information requested.
SCFG will not charge you a fee for making a hardship application. However, if the application is successful and the contract is amended, then SCFG may charge you a fee.
What SCFG will consider
When considering a proposed repayment plan as part of an unforeseen hardship application, SCFG will have regard to:
- The likely duration of the unforeseen hardship and what steps, if any, you are taking to address it;
- Your credit history and any other matters relevant to an assessment of whether you can make repayments without substantial hardship;
- Whether the repayment plan will allow you to meet your obligations during the period of the proposed repayment plan and over the remaining life of the loan contract; and
- Whether the repayment plan would fail to enable you to meet your obligations during the period of unforeseen hardship, would unnecessarily prolong the period of difficulty, or would be likely to result in you experiencing financial difficulties over the remaining life of the credit agreement.
For more information, please see www.comcom.govt.nz/consumer-credit/consumer-credit-fact-sheets-post/applying-for-hardship/