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Am I eligible to go to an EDR scheme or court?

If you can tick all of the following points, you are eligible to go to an EDR scheme or court:

  • The National Consumer Credit Protection Act and the National Credit Code must apply to your loan (see How can this guide help me? to find out if they apply to your loan).
  • You must have a good reason (called ‘reasonable cause’) for not being able to meet your payments, for example you had a work accident or your hours of employment were reduced. The court will not consider things like buying a new TV or losing your money at the casino as ‘reasonable cause’ for not meeting your payments.
  • You must be able to afford the payments if the contract is changed.
  • You must show you have tried to negotiate first with the lender (records of phone conversations and your written request to the lender to change your loan).
  • You must show how many times you have defaulted, the amount outstanding (in arrears) and give reasons why you should be given a second chance, in other words, be able to show how you plan to get the loan back on track.
  • You must show there is no other way to bring payments up to date.
  • You must show what is at stake for you if the EDR scheme or court does not grant the order. For example, the lender is likely to repossess the car, your area has no public transport and without the car you would be unable to get to work and transport your children to school.

Which EDR scheme do I go to?

All consumer credit lenders must be a member of the Australian Financial Complaints Authority.

Which court do I apply to?

In most instances, if you want to apply to the court for a variation of your loan contract, you must file an application in the Magistrates Court.

Generally if your loan debt is less than $150,000 it will be heard in the Magistrates Court. Disputes between $150,000 and $750,000 are heard in the District Court, and disputes over $750,000 are heard in the Supreme Court. Remember, this only applies to loans taken out in Queensland. If your loan originated in another state, contact the Legal Aid office in that state for advice on how to apply for the court to vary your loan contract.

If the lender has already started court proceedings against you in the District or Supreme Court, then you will need to bring your application to the relevant court to temporarily stay (put on hold) those proceedings.

If you’re not sure where to lodge your claim, get legal advice to confirm the correct court for your matter.

Lodging a complaint with an EDR scheme

Lodging a complaint with the Australian Financial Complaints Authority’s EDR scheme temporarily puts on hold any existing court proceedings while the EDR scheme reviews your complaint.

If you are lodging a complaint with an EDR scheme, make sure you put forward a reasonable and practical proposal that addresses your financial hardship. Lodging a complaint to buy time does not usually help you to get out of your difficult circumstances.

How do I lodge a complaint with an EDR scheme?

You can lodge a complaint with the Australian Financial Complaints Authority’s EDR scheme online or on the phone. Contact:

The Australian Financial Complaints Authority
1800 931 678
www.afca.org.au

You do not need a lawyer to lodge a dispute with an EDR scheme.

You do not have to appear before an EDR scheme like you do in court. The EDR scheme will make a decision about the dispute after reading all the documents you and the lender have lodged.

There are no specific documents or special forms that you have to provide to an EDR scheme as part of a dispute. However it is important you provide evidence of conversations you have had with your lender, and letters the lender has sent you about your loan and your request for financial hardship.

Make sure you respond to the EDR scheme by the deadline they set for a response. If there is a good reason why you cannot respond before the deadline, then you should ask the EDR scheme for an extension before the deadline expires.

Unlike court, an EDR scheme can make a fair and reasonable decision in line with the law and good industry practice.

If you get a new loan payment plan agreement through the EDR scheme, make sure you keep your side of the agreement and make your payments on time, as it is very difficult to be successful in another financial hardship application before an EDR scheme if you haven’t been able to follow a previous agreement.

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