MyCRA Specialist Credit Repair Lawyers

Tag: financial hardship laws

  • New credit laws: the single best thing you can do to prevent bad credit

    change attitude to billsChange your attitude towards paying your bills, and change the likelihood you will suffer from bad credit. That is the single best thing you can do to prevent bad credit in the form of defaults, and now, the dreaded late payment notation. It’s not rocket science of course, but changing your financial attitude and stopping the crazy juggling act is one of those things I have seen in my time that most people on the slippery financial slope don’t do, that they could do to get themselves on the road to long term financial recovery long before they have defaults. Without defaults or late payment notations on your credit file, you score much better in the lender’s systems. You have a much better chance at securing credit in the future, including major credit like a home loan.

    By Graham Doessel, Non-Legal Director of MyCRA Lawyers www.mycralawyers.com.au.

    Although we would like to believe that the credit system is foolproof there are always going to be instances where Credit Providers make mistakes, and you cop bad credit unjustly or incorrectly. That you can’t help. T

    he type of bad credit I’m talking about is the bad credit which is directly attributed to you not paying your accounts on time. Instances where it’s either entirely or mostly your fault.

    With our new credit laws in place, it is quite likely that at some point most Credit Providers holding an Australian Credit Licence (eg banks and building societies) will sign on to comprehensive credit reporting and be able to access and report on your repayment history. So if you’re late by more than 14 days paying your credit card, personal loan or home loan, you run the risk of having a late payment notation recorded on your credit file and remain there for two years.

    A story yesterday from the Brisbane Times, Telcos and utilities could suffer under new credit rules quotes the Australian Retail Credit Association (ARCA)’s Damian Paull. ARCA are the guys that devised the Credit Reporting Code of Conduct, to go with our new Privacy Laws. Mr Paul said there is a danger that banks who chose not to report consumer repayments information and telcos and utilities – which are excluded from the new regime – could find there is a financial impact.

    “Once consumers get a sense of who is reporting, what’s going to happen?,” he said.
    “If I know bank X is reporting and Bank Y isn’t, what is going to happen to banks who do not report that information? What is going to happen to telcos and utilities?
    “Is that going to put pressure on these organisations and their payments – I think this is probably going to happen,” he told a conference organised by Informa in Sydney on Wednesday.

    These comments worry me, because it tells me that it is predicted that people who are struggling with their repayments will simply make their loan and credit card repayments on time, but miss the mobile or energy bill, because those are not subject to repayment history.

    Whilst this may be true, as someone who has been involved in the finance sector a long time, it is not a sentiment I want to accept.
    Fair enough, some months you may be a little short on cash. Yes, to avoid repayment history, you may want to pay your credit card, but leave your phone bill.

    But for those people who are consistently unable to meet all of their repayments on time – there was no mention in the article from any of those commenting, of what they should do, to get back on track.

    By acting early and taking advantage of new financial hardship laws, you can save yourself from mounting debt, late payment notations and defaults.

    If you are suddenly unemployed, fall ill, separate from your spouse or have a period of intense debt stress – you should know there are laws that may be able to help you through this difficult time. By putting your hand up early– before your accounts go into arrears – you could save your credit file. But why are there not more people aware of this?

    Time and again, I see people burying their heads in the sand, robbing Peter to pay Paul, until they are in so much debt it slaps them in the face. You should know that a bump in the road doesn’t have to mean you can’t borrow again, so long as you handle it the right way.

    New financial hardship laws brought out by the Government last year have been designed to protect consumers during times of temporary financial hardship.

    Last year, Steven Münchenberg, Chief Executive of the Australian Bankers Association, said in a statement to the media that only one in four bank customers knew that banks offered hardship assistance.

    As a company involved in credit dispute, MyCRA Laywers has helped many clients in the past dispute credit listings issued during a time of financial hardship.

    If the powers that be played a more proactive role in credit education, this issue would no longer be as prevalent.

    In the past consumers have not been offered hardship variations with their bank, or they have not been aware they have a right to request one and have been defaulted – this locks them out of mainstream credit for five years. If you are largely aware of your rights and obligations, then you might request a variation to your credit agreement early and potentially avoid the long term pain for what is often a very temporary issue.

    The earlier you act, the better off you will be. The key word here is ACT. Don’t hide from your Credit Providers and hope it will all go away. It never does.

    If you are experiencing temporary financial hardship you contact your bank or building society and ask to speak with the Financial Hardship Variation Team. Using the specific words ‘financial hardship’ will help make it clear to the bank what you need. Ideally, act before you fall into arrears on your account – to save your credit file when you recover from this difficult time.

    If you’re not at the point of needing a specific hardship variation with your bank, but you still struggle from time to time – don’t wait till everything goes belly up. There’s plenty of help out there for people who aren’t great juggling their finances or have found themselves over-committed. There are free financial counsellors out there who should be able to help you. Contact the Financial Counsellors of Australia www.fca.org.au for more help.

    Image: Danilo Rizzuite/ www.FreeDigitalPhotos.net

  • Suffering financial hardship? Speak up early to protect your credit rating.

    Media Release

    temporary financial hardshipSuffering financial hardship? Speak up early to protect your credit rating.

    6 June 2013

    Temporary financial difficulty has in the past led to accounts in default and years of restrictions to mainstream credit – but a consumer advocate says by acting early and taking advantage of new financial hardship laws, a bump in the road doesn’t have to mean you can’t borrow again.

    CEO of MyCRA Credit Rating Repair, Graham Doessel says for those people suffering temporary financial problems, there is now a large incentive to talk to your bank.

    “If you suddenly lose your job, fall ill, separate from your spouse or have a specific period of intense financial difficulty – you should know there are laws that may be able to help you through this difficult time. By putting your hand up early– before your accounts go into arrears – you could save your credit file,” Mr Doessel explains.

    This comes after the Australian Bankers’ Association (ABA) have this week embraced new financial hardship laws designed to protect consumers during times of temporary financial hardship, committing to a financial hardship package around consumer awarenesss.

    Steven Münchenberg, Chief Executive of the ABA, said in a statement to the media on Tuesday[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][i] : “Our research tells us that only one in four bank customers know that banks offer hardship assistance. We would like to change that.”

    “If customers find themselves in financial difficulty, they need to take some action because money troubles don’t usually go away on their own. Don’t ignore the problem and talk to your bank as early as you can. Customers can also call an independent financial counsellor or ask your bank for a referral to an independent financial counsellor.”

    Mr Doessel agrees consumers have largely not been aware. He says he has helped many clients in the past dispute credit listings issued during a time of financial hardship, but he hopes that due to the ABA and banks playing a more proactive role in education, this will no longer be as prevalent.

    “In the past consumers have not been offered hardship variations with their bank, or they have not been aware they have a right to request one and have been defaulted – this locks them out of mainstream credit for five years,” he says.

    “If consumers are largely aware of their rights – then then they will request a variation to their credit agreement early and can avoid the long term consequences for what is often a very temporary issue.”

    He says the earlier consumers act, the better off they will be.

    “If they are able to secure a hardship variation prior to their account going into arrears at all, they may also avoid having the new late payment history recorded against their name, which could impact credit worthiness,” he says.

    Consumers experiencing temporary financial hardship should contact their bank and ask to speak with the Financial Hardship Variation division

    “Using the specific words ‘financial hardship’ will help make it clear to the bank what you need. Ideally, act before you fall into arrears on your account – to save your credit file when you recover from this difficult time,” Mr Doessel says.

    /ENDS.

    Please contact:

    Graham Doessel CEO Ph 3124 7133

    Lisa Brewster Media Relations media@mycra.com.au

    Ph 07 3124 7133 www.mycra.com.auwww.mycra.com.au/blog

    MyCRA Credit Repair 246 Stafford Rd, STAFFORD Qld

    MyCRA is Australia’s number one in credit rating repairs. We permanently remove defaults from credit files. CEO of MyCRA Graham Doessel is a frequent consumer spokesperson for credit reporting issues and is a founding member of the Credit Repair Industry Association of Australasia.

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  • Struggling to pay your mortgage or loan? Your bank says they want to help.

    financial hardshipIt may be a foreign concept to some people to turn to their bank when they are experiencing financial difficulty, but asking for help from your bank could be the most savvy thing you can do for your finances, and ultimately your credit file if you are in trouble. New financial hardship laws which came into effect in March 2013 have been embraced by banks, and the Australian Bankers’ Association (ABA) has today announced a package which is designed to help make the process clearer for consumers who are experiencing temporary financial difficulty. We look at the package in detail, what it means for your credit file and your ability to obtain credit when you recover financially.

    By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.

    As a Cancer survivor, I know all too well what it’s like to be in a worrisome financial situation. When you have to take time out from your business or employment to recover your health, the bills can pile up. I remember trying to talk to my bank at the time about freezing my mortgage so I had one less worry. But that was a difficult thing to do – especially for someone whose small business used credit accounts. In my experience, my bank wasn’t eager to offer the hardship, and when they did, it was under terms too difficult for me to accept. So I borrowed my way out of trouble, and luckily – I recovered quickly and was able to get back on my feet again. But many people in the past have not been so lucky. They have run into real trouble, and banks may have been criticised for not being open with the existence of their hardship policies, or willing to vary credit terms unless the customer could jump through the right hoops to secure it.

    But with new legislation Consumer Credit Legislation Amendment (Enhancements) Bill 2012 being passed this year, there have come new rights for those in temporary financial trouble. Now the banks are taking a proactive stance on encouraging open communication and variations to the original credit contract of those consumers ‘doing it tough.’

    The ABA and banks in consultation with consumer and community groups have developed a package of initiatives that are proposing to promote good practice, clearer hardship processes and provide useful information to support their customers in dire financial circumstances.

    This is reportedly in response to concerns raised by stakeholders around a general lack of awareness about hardship assistance offered by banks.

    Steven Münchenberg, Chief Executive of the ABA, says research shows only one out of four bank customers know that banks offer hardship assistance.

    “If customers find themselves in financial difficulty, they need to take some action because money troubles don’t usually go away on their own. Don’t ignore the problem and talk to your bank as early as you can. Customers can also call an independent financial counsellor or ask your bank for a referral to an independent financial counsellor,” he said in a media statement.

    The ABA estimates that over 135,000 customers have been provided with hardship assistance by the main retail banks over the past year.

    Banks have reported that the number of customers who take advantage of financial hardship arrangements increases when economic conditions deteriorate. The key driver of hardship assistance is reduced income due to unemployment.

    Banks have also reported that customers have benefited from temporary assistance following a natural disaster. However, assistance during these times does not have a significant impact on the overall number of customers who are provided with hardship assistance.

    Mr Münchenberg also says illness, injury or a relationship breakdown can cause financial difficulties.

    The ABA’s consumer factsheet on hardship variations (pdf) explains what some of the hardship assistance options could be:

    Hardship arrangements cover the time between when your circumstances change and when you can start repaying your debts in full or varied as agreed.

    In most cases, people just need some temporary help to get them through the tough times and arrangements of between three and six months are generally suitable.

    The arrangements available will depend on your personal circumstances and financial situation. Somemeasures may include:

    • deferring or reducing loan repayments

    • restructuring and consolidating loans

    • altering loan repayments to interest-only

    • changing limits on lines of credit

    • waiving penalties for early withdrawal of a term deposit

    • freezing loans in exceptional circumstances, such as after an emergency event or natural disaster

    • providing a moratorium on collections action • providing alternative banking arrangements.

    When considering the type of assistance that might be appropriate, banks will assess the situation on a case-by-case basis and consider your specific circumstances, such as your overall financial position and whether assistance would genuinely be able to help you.

    Banks also have to factor in business considerations, such as whether providing the assistance is consistent with their internal policies, commercial costs and management practices.

    If your financial situation has permanently deteriorated and you can’t meet regular repayments over the long term even with your bank’s help, you might need to consider other options and make some difficult decisions.

    While people rarely have to face this situation, if it occurs you may have to sell your property, refinance your business or consider bankruptcy or insolvency arrangements.

    How will asking for a hardship variation impact my credit file?

    We see the emphasis on hardship variations as a positive change for consumers to be able to talk to their bank and actively get help to improve their circumstances. One of the main differences between asking for and obtaining an official variation in your credit obligations compared with simply not paying your bills is that you avoid the bank placing a default listing on your credit file (provided you meet the new obligations that is). There is a big incentive to come to try to come to an arrangement with your bank prior to being in default (60 days in arrears) – as any arrangements made after that time will be recorded on your credit file as well as your default.

    Secondly, there is also an incentive to put your hand up and ask for help in the early days – prior to being even one payment cycle behind in your repayments. Any time you fail to make a repayment with your bank on time, the late payment will be recorded on your credit file – so for example if you are unable to make this month’s mortgage repayment by the due date, that will be recorded on your credit file, along with the date you made the payment. Although lenders won’t see this data until March 2014, it is being recorded now.

    Any person who makes an official hardship variation which is accepted by their bank will be spared from being recorded as in default, but may not be spared from the late payment notations which are incurred prior to the acceptance of the hardship variation. So the incentive really is there to get in as early as possible if you are experiencing temporary financial difficulty and speak with your bank to make new arrangements to suit you.

    Where do I go from here?

    You can get assistance through the ABA’s Doing It Tough website, or you can contact your bank or building society directly and ask to speak with the Financial Hardship Variation Team. Using the words ‘financial hardship’ will help make it clear to the people you speak with at the bank about what it is you need. Ideally, act before you fall into arrears on your account – to save your credit file when you recover from this difficult time.

    For additional advice, visit ASIC’s Money Smart Website Trouble with Debts.

    To check what is being seen by lenders about you, it is a good idea to get a copy of your credit file. This is free once every 12 months from Australia’s credit reporting agencies, and will be sent within 10 working days. If there is anything on your credit report which you are unsure about, or which seems inaccurate or inconsistent, you do have the right to have the information rectified. Contact MyCRA Credit Rating Repair for more information on disputing a credit listing or to obtain a free copy of your credit report 1300 667 218.

    Image: imagerymajestic/ www.FreeDigitalPhotos.net