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Legal words and phrases explained

We have described these words as we use them in this guide. If you are still not sure what a certain term means, ask your lawyer to explain it to you.

Affidavit –  A statement sworn under oath in the presence of a commissioner of declarations, justice of the peace or a lawyer.

Arrears –  The amount you have fallen behind in your payments.

Default –  Your loan is 'in default' if you have not met a condition in your loan contract, like not making a payment on time.

Deponent – A deponent is a person who makes a statement (deposition) under oath. On the forms you submit to the court (see samples in Sample documents and forms) the term 'deponent' refers to you, the one making the affidavit.

Enforcement proceedings –  These are actions a creditor takes to recover a debt (get their money back). Enforcement proceedings can include:

  • repossessing assets you provided as security on the loan
  • claiming the money you owe them in court
  • applying for a court order to make you pay back all the money you owe
  • applying for an injunction (another type of court order) to stop you doing something that would make it harder for them to recover the loan, like selling a secured asset.

Hardship threshold –  The hardship threshold is the maximum amount of money you can owe and still have options available under the National Credit Code to change your loan conditions if you have financial problems.

If your loan is less than the threshold amount you can ask your credit provider, or even the court, to change your payment obligations if you are having financial problems.

The threshold changes every three months because it is linked to average loan sizes in New South Wales. You can check the current threshold at www.moneysmart.gov.au/managing-your-money/managing-debts/trouble-with-debt/hardship-threshold

Interest –  Interest is money you pay to the lender for borrowing their money. It is the main cost of borrowing money. Most people's interest payments will add up to more than the amount they originally borrowed, particularly if the loan is being paid back over 20 or more years. Interest is usually talked about as an annual percentage rate. Your contract should give details about how it is calculated and charged.

Lender –  The bank, finance company or other institution who has lent you money.These may also be referred to as the 'creditor'.

Loan contract date –  This is the date the last person signed the loan contract. The date will be on your contract.

National Credit Code –  The National Credit Code is part of the National Consumer Credit Protection Act. The National Credit Code is an Australian law that sets rules about the way credit is provided to consumers (not businesses). If a loan is regulated by the National Credit Code it means the lender has to meet certain obligations towards consumers and can be penalised for not doing so.

National Consumer Credit Protection Act –  The National Consumer Credit Protection Act is an Australian law that makes rules about the way credit is provided to consumers (not businesses). If a loan is regulated by the National Consumer Credit Protection Act it means the lender has to meet certain obligations towards consumers and can be penalised for not doing so.

Periodic payments –  These are regular payments required under your contract.

Principal –  The principal is the amount of money you borrowed. It does not include any interest you agreed to pay under the contract.

Secured asset –  Something you own like goods, a car or property (assets), which is listed in your loan documents as security. If you default on the loan, the lender can take this security (provided they give the correct notices) and sell it to recover the money you owe them.

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