If you are experiencing financial hardship it is important to know that there are plenty of options available. Banks have specific policies, programs, practices and support services in place to do this. In most cases, customers just need some temporary assistance to help them through the tough times. Arrangements of between three and six months are generally suitable for most people. Help is there if you need it.
Remember – Banks will look at your situation on an individual basis because every customer is likely to have unique circumstances. The arrangements available will depend on your personal circumstances and financial situation.
Banks will consider a range of factors when deciding whether to provide assistance and what kind of arrangements may be suitable for you. For example:
- Your circumstances, needs and financial situation at the time your personal or financial circumstances changed
- the type of credit facility (for example, secured or unsecured loan) and type of accounts you have
- whether the period of change to your personal or financial circumstances is known
- whether there are other factors affecting you
- whether assistance would generally help i.e. whether your financial position can be restored to allow you to make repayments (without causing further undue hardship)
- whether you have received assistance in the past.
Banks also have to factor in business considerations, such as whether providing the assistance is acceptable commercially and consistent with their internal policies, credit risk etc.
However, banks are not obliged to provide the following types of hardship assistance and they maintain the discretion to decide which arrangements to offer based on their customers’ unique circumstances and other considerations. It is important to note, that some arrangements may require permanent changes to the credit contract and/or a new contract.
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Associated arrangements may include
If your financial situation has permanently deteriorated, so that you can’t meet regular repayments over the long-term, other options may need to be considered. These could include:
- Selling your property,
- Refinancing your business,
- Pursuing bankruptcy,
- Insolvency arrangements,
- Other arrangements or solutions.
These are, generally-speaking, the last resort and your bank will actively try to avoid these measures. However, it is important to get in contact with your bank as soon as possible (before you are in arrears) to avoid these hard decisions having to be made.
After speaking to your bank, you may wish to seek advice from a professional financial adviser or from an independent financial counsellor about available options. For more information about financial counselling services, you can call 1800 007 007 or go to www.financialcounsellingaustralia.org.au or read more
Applying for hardship?
Under the National Credit Code (Schedule 1 to the National Consumer Credit Protection Act (2009), the bank has to respond to a hardship notice in certain ways. Read more about how the process works.
For more information about your rights, including under the law and the Code of Banking Practice read more here