You will need to consider whether it is in your best interests to sell your property to repay the loan. You may wish to seek advice from a financial counsellor or other expert to help you make the right decision.

If you decide to sell your property and repay the loan, we can ask your lender to give you time to sell your property. We can also ask your lender to reduce or postpone your payments until the property is sold.

If your lender allows you time to sell the property, they may require you to agree to some or all of the following conditions:

• the property must be put up for sale within a certain period
• unconditional contracts of sale must be exchanged by a certain date
• you must agree that if contracts of sale are not exchanged by a certain date, you will give possession of the property to the lender
• the contract of sale must say that settlement will take place within a certain period
• you must agree to make whatever payments you are able to during the sale period
• you must authorise the lender to get updates from the real estate agent on the progress of the sale.

A lender may agree to any, all or a combination of the following:

• extending the term of your loan, reducing your payments
• postponing your payments
• converting your loan to an interest-only loan
• reducing the interest rate on your loan
• 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.

When reviewing your financial hardship complaint, it is important that you provide us with information requested as soon as possible. If you can’t, please let us know so we can give you an extension. However, if you still can’t provide information even after an extension of time, we may close your complaint.

We may hold a conciliation conference, with an independent conciliator (a trained COSL Case Manager).

Download our Guide to Conciliation Conferences (PDF).

We may direct the lender to vary your payments if:

• your loan is covered by the Consumer Credit Code or the National Credit Code, and
• it is likely that you will be able to meet your payment obligations if they are varied in a particular way.

We may not be able to assist you if your financial hardship is long-term and it is unlikely that you will be able to repay the loan even if the loan is varied. However, we may direct the member to give you time to sell the property.

If your lender declines your application for hardship assistance, you can make a complaint with us.

If your lender is varying your payments, they must notify you in writing about the new payment arrangement before it comes into effect. It is important that you understand how the new arrangement will work:

• what is the new payment?
• when do you have to start making the new payments?
• how frequent are the new payments?
• do you need to change your direct debit authority because the date of payment has changed?
• if the arrangement is temporary, when do you have to re-commence your normal payments?

Be careful about accepting any offers of a payment arrangement, especially if you think you can’t afford it. If you do accept the arrangement and you are unable to meet the new repayments, it may be difficult to ask for another payment arrangement later on.

While we are reviewing a financial hardship complaint, your lender must not:

• begin or continue with legal action (unless you have already taken a step in the legal proceedings beyond lodging a defence or a defence and counterclaim
• sell the debt to another company
• list a default on your credit file.

Remember, although legal action is on hold while we are reviewing your complaint, you should continue making whatever payments you can.

The lender may re-commence legal action if we cannot deal with your hardship complaint further. However, they must allow you 14 days in which to file a defence or a defence and counterclaim (if you have not already done this).

It is preferable for a financial hardship application to be made by all co-borrowers. However, there are occasions where one co-borrower is in financial hardship and the other:

• is not able to make the payments on their income alone
• cannot be contacted
• is not making payments (because, for example, there has been a breakdown in the relationship between the co-borrowers).

A lender should consider a hardship application even if it is from only one of the co-borrowers.

If you are making an application for financial hardship assistance and your co-borrower is not contributing to loan payments, you will need to show that you will be able to meet your obligations under the loan without the other borrower.

The lender will need to see if your situation is likely to improve and if you are able to meet your repayments if your required payment is varied.

They will need you to complete a financial hardship application form and a statement of financial position, which sets out your income, expenses, assets and liabilities. You may also be asked to provide supporting documentation, such as bank account statements, pay slips, utility bills, tax returns and medical certificates.

The lender is only required to consider your request for financial hardship assistance if you provide them with the information they reasonably need to assess your financial situation.

You should contact your lender as soon as possible if:

• you are not able to meet your loan payments
• you are finding it difficult to meet your loan payments
• you have received a default notice from your lender.

Your lender will be able to provide you with more options the earlier you approach them.