Drowning in debt? Finding it hard to meet your loan repayments? Feeling stressed and not sure how you are ever going to get out of the debt-trap? We hear you, you’re not alone and there is something you can do about it. In our latest blog, we explain what a hardship variation is and how you can apply for one.
What is a hardship variation?
A hardship variation is essentially a claim for hardship, which when applied for and accepted, effectively changes the terms of your loan.
If you are finding it difficult to meet your loan repayments, due to illness, unemployment or changed financial circumstances, you can apply to your lender for a ‘hardship variation’.
There is a hardship threshold for when you can and can’t claim for hardship too.
For example, if you entered into a credit contract before March 2013, your credit provider must consider your hardship application if the amount that you borrowed is less than the threshold (maximum amount allowed) which applied on the date you signed your credit contract.
Further information on the thresholds is available on the ASIC money smart website.
How can you apply for a hardship variation?
Think you might be eligible for a hardship variation? So, how do you apply?
Here are some steps for you:
- Contact your lender or credit provider by phone or in writing
- Ask to speak to a ‘hardship officer’ or someone in ‘the hardship team’
- Provide them with the details of your loan: Account name / Account number / Your payment instalment amount
- Advise them that you want to change your loan repayments, because you are experiencing financial hardship (as set out in section 72 of the National Consumer Credit Code)
- Explain why you are having difficulties making payments, how long you think your financial hardship will continue and how much you can afford to repay.
Prefer to write a letter?
The Financial Rights Legal Centre have a sample letter generator to help make it that little bit easier for you.
After applying for a hardship variation, the credit provider must respond to your request in writing within 21 days letting you know the outcome of your hardship request.
Should the credit provider ask you for more information to help them make a decision, you must provide this to them within 21 days.
A few tips from us
- When negotiating a repayment plan, make sure you can afford it. There is no point agreeing to an amount that is too high for you to pay!
- If your credit provider refuses your hardship application, they must give reasons. If you are not happy with their response, you can ask to speak to their internal complaints section.
- If you find you can’t stick to the new arrangement, tell your credit provider straight away! Keep paying as much as you can afford, even if it is not as much as the credit provider is asking for.
- Be friendly and polite, this can make the whole process a little easier.
- Remember that credit providers have a legal obligation to respond to you if you are having problems paying your loans.
- You don’t have to go it alone. Financial Counsellors offer free and confidential help available to assist you to get a clear picture of your situation and understand your options.
If you’re finding it hard to meet your loan repayments, you could be eligible for a hardship variation. Find out if you’re eligible today.
At Life After Debt® we have offices in Perth and Sydney; we can help you reduce unmanageable debt by offering you affordable, practical debt solutions without taking out another loan. If you are struggling with debt, want to avoid legal action and bankruptcy then call our friendly team today on 1300 237 669 or Contact us today to receive honest and sympathetic advice, without judgement.