Applying for hardship

Under the Credit Contracts and Consumer Finance Act 2003 (CCCF Act), you have the right to ask for a change to consumer credit contract, if you meet the following criteria:

• You have suffered a hardship such as illness, injury, loss of employment, the end of a relationship, or other reasonable cause
• As a result of that hardship, you are unable reasonably to meet your obligations under the contract, and
• You reasonably expect to be able to discharge your obligations if the contract was changed in the ways specified by the CCCF Act (see below).

You can make a hardship application at any time, unless:

• You have been in default for two months or more;
• You have been in default for two weeks or more after receiving a repossession warning notice in relation to that default;
• You have failed to make four or more consecutive debt repayments on their due dates;
• It was reasonably foreseeable to you at the time the contract was made that you would be unlikely to be able to meet your obligations under the contract because of the illness, injury, loss of employment, the end of a relationship, or other reasonable cause

Under the hardship application, you can ask for a contract to be changed by either:

• Extending the term of the contract and reducing the amount of each payment, or
• postponing debt repayments for a specified period of time (a payment holiday), or
• extending the term of the contract and postponing debt repayments for a specified period of time (a payment holiday).

While these options will provide temporary relief, they are likely to increase the total amount owing on a loan.

You cannot seek changes that are more extensive than is necessary to enable you to reasonably meet your obligations under the credit contract. The changes asked for must also be fair and reasonable to both the borrower and the lender when all the circumstances are taken into account.

You must make their application for hardship in writing and it must be given to us. You must state in their application the reason or reasons for the unforeseen hardship. It may also help to include supporting information, such as a letter advising redundancy or a doctor’s certificate.

An application letter must include the specific changes you want to make, ie, whether you want to:

• extend the term of the contract and reduce the amount of each payment under the contract, or
• postpone debt repayments for a specified period of time (a payment holiday), or
• extend the term of the contract and postpone debt repayments for a specified period of time (a payment holiday).

Both parties must agree to the changes before you are permitted to make any changes to your repayments.