Request for Hardship Variation

Important: This letter can be used as a guide. This letter is information only and should not be relied upon as legal advice. You must insert your own details where appropriate and delete any information that is not relevant to your situation. Always date your letters. Always keep a copy of the letter you send.

Where to send the letter:

Send the letter to the internal dispute resolution contact for the lender which can be obtained by ringing the Financial Ombudsman Service on 1300 780 808 or checking the member contact list at www.fos.org.au at www.cosl.org.au. All lenders must be members of a dispute resolution scheme (Financial Ombudsman Service or the Credit Ombudsman Service) by July 2010 except those lenders who are no longer offering new loans or not regulated under the credit law. If you lender is not in EDR – get legal advice.

CONTINUE MAKING REPAYMENTS WHILE YOU ARE WAITING FOR A RESPONSE TO YOUR REQUEST FOR HARDSHIP!

GET LEGAL ADVICE IF YOU ARE UNSURE ABOUT ANYTHING

Date:

[Name of Lender]
[Address of Lender]

Dear Manager,

Request for change on the grounds of hardship
Account name:
Account no:

I/We wish to apply to you for a variation of the above loan contract on the grounds of hardship under section 72 of the National Credit Code (Schedule 1 of the National Consumer Credit Protection Act).

Choose one of the following options according to the type of lender you have your home loan with:

Option 1: Where the lender is a bank and has agreed to be bound by the Code of Banking Practice (check at www.bankers.asn.au)

I/we also refer to the commitment of the bank to:

Relieving Mortgage Stress – A common approach for assisting borrowers facing financial hardship (Media Release from the Federal Treasurer)
Work with customers in financial hardship as required under Section 25.2 of the Code of Banking Practice

Option 2: Where the non-bank lender is a member of the Mortgage and Finance Association of Australia (check at www.mfaa.com.au):

I/we also refer to your commitments under sections 65 – 72 of the Mortgage and Finance Association of Australia Code of Practice.

Option 3: Where the lender is a credit union or building society and has agreed to be bound by the Mutual banking Code of Practice (check at www.abacus.org.au):

I/we also refer to the commitment of the credit union/building society to:

Relieving Mortgage Stress – A common approach for assisting borrowers facing financial hardship (Media Release from the Federal Treasurer)
Working with customers in financial hardship as required under Section 24 of the Mutual Banking Code of Practice

The rest of this letter should be included for all lenders:

I/We assume you will stay all enforcement action while you consider this application. If this is not possible, please let me/us know immediately in writing.

Section 72 of the Code sets out the general principle that a debtor who is unable, reasonably, because of illness, unemployment or other reasonable cause to meet their obligations under a credit contract but reasonably expects to be able to repay the debt if the contract is changed in the ways described, may apply to the lender for such a change.

Illness, Unemployment or other reasonable cause

I/we have been in financial hardship because of illness and/or unemployment and/or [examples of other reasonable causes are family breakdown, decreases in income, children’s illnesses, and/or caring responsibilities].

The details of my illness/unemployment and/or other reasonable cause are as follows:

[Give Details e.g. I was unwell with a heart condition for 6 month ending in February 2009. A medical certificate is attached.]

Expectation of being able to reasonably repay the loan if the variation is granted

I/we expect to be able to reasonably repay the loan if the requested variation below is granted. I/we have been paying loan repayments of $ per fortnight/per month while I/we have been in hardship.

I/we have now returned to work and can now afford the scheduled repayments on the loan OR

I/we expect to return to work on [give date or number of months] and then I/we will be able to afford the scheduled loan repayments

The requested change to the contract

I/we request that following change to my/our contract:

A reduction of the amount of each repayment to $ per week/fortnight/month. This change is requested for [number of months] months. The term of the loan will be extended and any arrears will be added to the loan (capitalised). AND/OR
Postponing the repayment due on / / so that it is now due on / /. AND/OR
Postponing the repayments due between / / and / / and extending the term of the loan.

I assume that you will not continue to charge default fees or default interest while my/our hardship request is being considered.

In support of my application I give the following details:

Details of Income and Expenditure:

My/our current income is: $ per week/fortnight/month

Mortgage: $ per week/fortnight/month

Other loan repayments: $ per week/fortnight/month

Please send a detailed Financial Statement of Position to complete by me/us, if required

As can be seen from the above information, I/we will be able to discharge our obligations under the above contract if you agree to the proposed change. I/we ask that you consider this application as a matter of urgency.

I/We await your reply in writing.

____________________
[Full name(s)]