Financial Hardship FAQs

 

Generally we will not ask you for medical information about your health. For example, we will not ask for a medical certificate to prove the cause of your financial hardship.

However, there may be circumstances where we or your financial services provider may need you to provide us with certain medical information. We will only do this if it is relevant to your financial hardship application. For example, if you have told us that you will be fit to start work again by a certain date, we may ask you for a note from your doctor confirming this.
 
It will not be necessary or appropriate for us or your financial services provider to ask for your entire medical file.
 
Further, if you are receiving a disability support pension, we do not consider it necessary or appropriate for us, or your financial services provider to ask you for a medical certificate confirming your disability.
 

We will generally not ask you to provide us with bank statements in order to verify your income and expenses.

We may, however, ask you to complete a financial hardship questionnaire, which is essentially a statement of your financial position (SOFP).

We will only ask you for bank statements if they are relevant in the particular circumstances.

We consider that:

  • it will not generally be necessary for us to ask you for your bank statements if you or your financial counsellor provide us with a letter from Centrelink confirming your Centrelink income, as well as a completed SOFP to show us your expenses.
  • usually we will only query the information contained in the SOFP if we think it may be inaccurate (for example, if it seems unusual, incorrect or extraordinary).
  • if your SOFP has been completed by a financial counsellor, we will assume that it has been accurately completed.
 

You should contact your lender as soon as possible, especially if:

  • you are unable to meet your loan payments
  • you are finding it difficult to meet your loan payments
  • your financial situation will be changing and you may be unable to meet your loan payments at that time
  • you have received a default notice from your lender.

You should try to make such payments as you are reasonably able to. Please be aware that interest, fees and charges continue to accrue on your loan.

If you are unsure what to do, we strongly recommend that you seek legal or financial counselling advice, as soon as possible. Some legal centres may provide you with free legal advice, and financial counsellors provide their services free of charge.

The earlier you approach your lender, the more options they will be able to provide you with. If you are not happy with your lender’s response, you may wish to make a complaint with us.

Further information about our approach to financial hardship complaints can be found in our Position Statement 2 and Position Statement 3

 

A lender may agree to:

  • a payment arrangement
  • capitalise the arrears, which would increase your payments
  • postpone your payments for some time
  • extend the term of your loan and reduce your payments
  • give you time to sell the security property
  • any other reasonable proposal that enables you to eventually repay the loan.

If your loan is not a consumer loan (e.g. it is a commercial loan), it may be more difficult to negotiate a favourable outcome.

Further information about our approach to financial hardship complaints can be found in our  Position Statement 2.
 

The lender will need to understand your financial situation to be able to consider your hardship request.

You will need show the lender that your situation is likely to improve and that you will be able to meet your payments if your contractual payment is changed.
 
To demonstrate that your financial situation is likely to improve so you can repay the loan, the lender may require the following: 
  1. why you are in financial hardship.
  2. an explanation of how and when your situation will improve.
  3. what you want from the lender
  4. whether you are able to make some payments and over what period of time, or
  5. a statement of financial position, which sets out your income and expenses, as well as supporting documents.
 
You may wish to use CIO’s  Hardship Application Questionnaire, which asks for this type of information.
 
You may also be asked to provide supporting documents, such as:
  • bank account statements
  • pay slips
  • utility bills
  • tax returns
  • Centrelink statements
  • details of debts with other creditors, or
  • (if you are seeking time to sell) an agency agreement or appraisal.
 

If your lender agrees to change your loan payments, it must write to you telling you about the new payment arrangement. Make sure you understand how the new arrangement will work. For example: 

  • What is the new payment?
  • On what date do you have to start making the new payments?
  • What is the frequency of the new payments?
  • Do you need to change your direct debit authority because the date of payment has changed?
  • If the arrangement is temporary, on what date do you have to recommence your normal payments?
  • If you are not sure about whether or not you should accept the arrangement, make sure you seek advice before agreeing to it.
     
If your lender offers you a payment arrangement that you’re unsure you can afford, be very careful about accepting it. If you do and then can’t meet the new payments, it may be difficult to later ask your lender for another payment arrangement.
 

If the lender declines your application:

  • it must write to you and set out its decision and the reasons for its decision
  • you can lodge a complaint with us.
  • you can contact us on 1800 138 422.
Once we receive your complaint, we will investigate whether we can assist you in asking your lender to reconsider its decision.
 
During our investigation, we may require you to complete and return our Hardship Application Questionnaire. To assist us in our investigation, you may wish to complete and return this questionnaire as soon as you make your complaint.
 
We also recommend that you  seek legal or financial counselling advice.
 

We may deal with your financial hardship complaint in any of the following ways:

  • refer your complaint back to the lender to give the lender a chance to re-consider its decision
  • negotiate an outcome between you and your lender
  • hold a conciliation conference between you and your lender
  • in certain circumstances, direct your lender to change your credit contract and the payments due under the credit contract.

We will only direct your lender to change your payments if:

  • your loan is covered by the National Credit Code
  • you are likely to be able to repay your loan if it is changed in a particular way.

However, if your financial hardship is long-term or permanent, it may be difficult for you to show us that you will eventually be able to repay your loan.

 

While we are considering your request, you should make such payments as you are reasonably able to. If you are seeking a payment arrangement, you should try to make the payments which you are proposing.

Please be aware that interest, fees and charges continue to accrue on your loan while we are considering your complaint.
 

If your lender is taking legal action and you are in financial hardship, it is important that you seek legal or financial counselling advice as soon as possible, so that you know what options may be available to you.

If you haven’t already, you may wish to ask your lender for financial hardship assistance.

If you are unhappy with your lender’s response, you may wish to make a complaint with us and in most instances, we can require your lender to discontinue enforcement action while we are reviewing your complaint.

However, only in very exceptional circumstances can we require your lender to stop an eviction.

If a Court has entered judgment against you, we are also limited in what we can do to assist you. This is because once your lender has obtained judgment against you, you are no longer entitled to apply for a financial hardship variation such as a request for a payment arrangement. For more information regarding our position once a Court has entered judgment against you, please read our Position Statement 3.

Please note that interest, fees and charges continue to accrue on your loan while we are considering your complaint.

 

You may make a complaint with CIO if your lender has obtained judgment. However, we can only assist you in limited circumstances.

If a court has entered judgment against you, you are no longer entitled to apply for a financial hardship variation such as a request for a payment arrangement.

We may still be able to assist you in negotiating your proposed payment arrangement with your lender. However, we would be unable to assist you further if your lender disagrees to your payment proposal.

In these circumstances, we may only be able to assist you in negotiating:

  • time to sell, where the sale would discharge the loan in full without a shortfall; or
  • time to apply to court to set aside the judgment.

We may only ask a lender to stay a judgment or eviction in very limited circumstances. We strongly recommend you urgently obtain legal or financial counselling advice.

For further information about our approach to complaints after judgment has been entered, read our Position Statement 3.

 

Only in very exceptional circumstances could we require your lender to stop an eviction.

If you have received a notice to vacate, we strongly suggest you seek advice from a financial counsellor or a community legal centre immediately.

For more information regarding our position once a court has entered judgment against you, please read our Position Statement 3.

 

You are generally entitled to make a financial hardship application on more than one occasion. However, we will take into account whether your circumstances have changed since the previous application.

 

We consider that a lender should allow a borrower reasonable time to sell the security property if the sale of the property is likely to discharge the loan in full, without a shortfall.

You will need to consider whether it is in your best interest to sell your property to repay the loan. You should seek legal or financial counselling advice to help you make the right decision.

Information that we may ask from you includes:

  • a copy of the agency sale agreement
  • how much you are trying to sell the property for
  • how much the property is valued at
  • how long you have been trying to sell the property
  • a copy of advertisements for the sale of the property
  • whether you are able to discharge the loan in full, without a shortfall.

For more information about our considerations, read our Position Statement 2.

 

We consider that a lender should generally allow a borrower reasonable time to refinance where there is a realistic prospect of this or where the financial position of the lender is fully protected because the value of the security property significantly exceeds the outstanding balance of the loan.

You will need to consider whether it is in your best interests to refinance. You may wish to seek legal or financial counselling advice to help you make the right decision.

 

A borrower can apply to the Department of Human Services (DHS) (including Centrelink) for the partial release of their superannuation funds. Depending on the circumstances, it may or may not be appropriate for you to do this.

If you are considering making an application for the early release of your superannuation funds, we recommend that you first discuss this with a financial counsellor or a community legal centre.

See Centrelink’s website for more information.

 

If your credit provider declines your hardship application, you may make a complaint to CIO.

Whether you have entered into a lease, a hire purchase agreement, a rental agreement or another type of financial product, we will ask your credit provider to consider your hardship request.

However, we may not be able to direct your credit provider to change your payments terms. We may only be able to ask them to reconsider their decision.

 

In some circumstances, a small business can make a complaint to CIO.  For more information, see Guidelines 22 and 23 in our Guidelines - Fourth Edition.

 

 In some circumstances, a small business can make a complaint to CIO.  For more information, see Guidelines 22 and 23 in our Guidelines - Fourth Edition.

 
CIO accepts a bankrupt person’s complaint only in limited circumstances.

You may wish to call us on 1800 138 422 to see whether we could consider your complaint.
 

We consider that a lender should assess the financial hardship application even if it is from only one of the co-borrowers. We may only ask your lender to consider your request if you intend to settle the issue in the Family Court or in another appropriate forum, within a reasonable time.

To find out more about our considerations regarding this issue please read our Position Statement 2.