If you are having difficulty in meeting your financial obligations due to temporarily reduced income, unemployment, ill health, relationship breakdown, addiction or no particular reason, then you are not alone.

Thousands of Australians get into financial trouble every year and the number is increasing. The first thing to do is contact creditors, explain your circumstances and see if they will agree to change your obligations to something you can afford.

If consumer credit contracts are changed by agreement the creditors should confirm this in writing. The Consumer Credit Code provides a formal procedure for varying loans in cases of hardship.

Sections 66-68 provide that a consumer may apply to the creditor to vary a contract, under hardship, up to a set dollar amount at the time of the application.  The manner in which the hardship threshold is determined has now changed to a “floating threshold” to reflect the current cost of new houses in the Australian property market.   Visit  http://www.creditcode.gov.au/display.asp?file=/content/hardship_threshold.htm  scroll down to find the most recent  amount.  Under a hardship variation a consumer can request the following:

• Reducing the amount of payments; or
  
• Postponing payments for a time; or
  
• Both

However, the money will still need to be repaid; you can request the length of the contract be extended. If the creditor does not agree to a variation you could enquire if the lender is a member of the Banking Ombudsman Service and complain to that service, www.bfso.org.au or the Credit Ombudsman Service http://www.creditombudsman.com.au/ and complain to that service  Also, in NSW, you can ask the Consumer, Trader & Tenancy Tribunal to order the creditor to do so. Apply as soon as possible as a time limit applies. Forms and information are available on   http://www.cttt.nsw.gov.au/default.html   or Tel: 1300 135 399

DISCLAIMER The information provided in this information sheet is of a general nature only, and is not intended to be legal advice. There may be errors or inaccuracies or the information may not be completely up-to-date. Always check the information provided before relying on it. The information relates to consumer law in New South Wales, Australia