You should contact your lender as soon as possible, especially if:
you are not able to meet your loan payments
you are finding it difficult to meet your loan payments
your financial situation will be changing and you may not be able 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 not sure 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 for free.
Your lender will be able to provide you with more options the earlier you approach them. If you are not happy with your lender’s response, you may wish to make a complaint with us.
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 4. whether you are able to make some payments and over what period of time 5. a statement of financial position, which sets out your income and expenses, as well as supporting documents.
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 not sure 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.
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.
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 not happy 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 COSL 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 not be able to assist you further if your lender does not agree 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
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 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.
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.
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: a) 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.
b) we will usually only query the information contained in the SOFP if we think it may not be accurate (for example, if it seems unusual, incorrect or extraordinary).
c) if your SOFP has been completed by a financial counsellor, we will assume that it has been accurately completed.
We will generally 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. We expect financial services providers to do the same.
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 saying 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.