A Time For Caution!

2013 will bring many challenges to Credit Worthiness. One of the biggest challenges is how to deal with the prospect that there are in arrears with loan repayments. January and February are traditionally the months where most people experience difficulty in meeting their loan repayments. In addition to the traditional reasons for falling behind namely the Christmas holiday period with its increased pressure on expenditure, this year many Australians are faced with the aftermath of a slowing economy.

By falling behind on loan repayments this exposes individuals to the threat of legal action as well as adding a blemish by way of default being notated on a Credit File.

There is legislative relief which regulates domestic or household lending and may provide relief in some circumstances, by affording consumers hardship provisions which places the onus of assisting the consumer falling on hard times on the lender.

Should you experience difficulty you should immediately do the following:

  • Contact the lending institution and advise them of the problem and request access to leniency based on hardship.
  • Formulate a plan to catch up with the arrears as soon as possible.
  • Look at ways to degrease the debt.
  • Log with precision any and all communications with a lender.
  • Ensure adherence to the strict terms of any alternative payment plan.

Prevention and early intervention is the Key. Most people are not aware there is legislation in place to assist them. By taking advantage of various legislative hardship provisions available this will have the effect of:

  • Preventing legal action for the recovery of the arrears.
  • Prevent the creditor in some instances from listing the arrears by way of default.

The integrity of a your credit file should be protected, for a listed default or judgment may prevent future borrowings for a period of up to 5 years and in some instances 7 years. Being aware of your situation and preventing the same will serve you well.

An individual's financial circumstances like most things are subject to the vicissitudes of life, crucial to financial well being are how the individual emerges from the hardship suffered.

Further positive credit reporting is soon to be introduced this will advertise payment history of a loan and shall display late payments even if they are not more than (60) days in the arrears, the need to protect your credit worthiness has never been greater.

The information referred to above is for educational purposes only, and should not be relied upon as legal advice. For more detailed advice on how to best help your clients speak with a qualified lawyer who understands this area of law. This article is written by Joseph Trimarchi Solicitor the principal of Joseph Trimarchi & Associates a law firm specializing in Australian Credit Reporting Law and Credit Repair. For more information he may be contacted at email: joe@josephtrimarchi.com.au

February 2013

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