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You will need to write a letter to your lender asking them to vary the terms of your loan due to hardship. In order to succeed in getting your loan changed you will need to show:
Note: Your plan must be clear and logical. Your lender is unlikely to accept a proposal that merely delays the inevitable.
The lender does not have to consider your proposal, but if they don’t, you could use this as evidence in court, or in an EDR scheme, of an unreasonable attitude.
See the sample letter in Sample documents and forms.
If your lender agrees to your request, ask them to confirm their agreement in writing. Keep this correspondence in case you need to use it later.
If the lender refuses your request, under the National Credit Code you have the right to take the matter either to court or to an EDR scheme. EDR schemes are
a cheaper option than court as they are free for consumers and there is no risk of costs being awarded against you.
If you go to court you will have to pay legal costs. This can be difficult if you are already suffering from financial hardship. Be aware that once the court makes a judgment about your matter, your rights to make a hardship application to an EDR scheme are severely restricted.
Lenders may also have obligations under a Code of Practice to help you when you are in hardship or financial difficulty. These Industry Codes of Practice have hardship obligations for lenders:
You can complain to the Australian Financial Complaints Authority when a lender does not follow the Code of Practice they have subscribed to. The lender cannot start court proceedings against you while your complaint is with the Australian Financial Complaints Authority. Contact:
The Australian Financial Complaints Authority
1800 931 678
The Australian Financial Complaints Authority is the new EDR scheme that has replaced the FOS and the CIO from 1 November 2018. You retain the same rights to complain about your lender’s conduct if they do not properly consider your hardship request.