Hardship and unjust transactions

Under the National Credit Code a debtor has a right to provide notice of hardship to the credit provider and the credit provider is required to provide a response within specified timeframes. The credit provider also has the right to request information from the debtor about the debtor’s circumstances.

If the credit provider does not agree to change the contract, the debtor has the right to apply to the court and the court can make orders. A court can also reopen the transaction if satisfied that the contract was unjust when it was entered into, and also has power to make orders in relation to interest rate changes, establishment fees and early termination or prepayment fees if satisfied that they are unconscionable.

For more information about these matters, please refer to Hardship and unjust transactions.

Default under consumer credit contracts

Generally before it can commence enforcement proceedings, a credit provider is required to give the debtor a default notice specifying the default and how it must be rectified, and giving the debtor at least 30 days to rectify the default. There are exceptions as to when default notice has to be given.

There is also a regime for providing a separate notice when there is a default in a direct debit.

For more information about default and default notices, please refer to Default under consumer credit contracts.

Enforcement of consumer credit contracts

This guidance note explains how a credit provider can enforce a consumer credit contract, including:

• • additional information required in a default notice if a credit provider wishes to enforce an acceleration clause;
• • the process for enforcement against a guarantor;
• • procedures for the repossession of mortgaged goods;
• • how a stay can be obtained by a debtor; and
• • rights of the debtor and/or guarantor to request the credit provider to negotiate a postponement of enforcement action or the operation of an acceleration clause.

For more information about enforcement, please refer to Enforcement of consumer credit contracts.