It is important to keep good personal records. Remember the following tips:
Keep receipts or other records of payment and copies of any letters you send or receive (when writing letters, remember to include the date).
If you are asked to provide documents, make sure you keep a copy for yourself (if possible, keep the original and send the copy).
Keep a note of telephone conversations or meetings. Write down the time, date and whom you spoke to (their name, their company or business and their job title).
If you make an agreement over the phone or in person, ask for it to be confirmed in writing (and also confirm it in writing yourself).
Keep all your records together to avoid losing any important information.
Make sure creditors are immediately informed of a change of address or contact details
If a direct debit has stopped but the debt still exits don’t wait to be contacted by the creditor, call first
If there is an issue with making a payment, call the creditor immediately to discuss
Make sure everything is in writing
Normally if a borrower fails to make a loan repayment on time, a lender can take prompt and immediate action to recover amounts owing, such as:
Demanding the full amount of the loan immediately (not just the late payment), i.e. accelerating the loan.
Taking possession of any secured goods and property.
Issuing legal proceedings to recover the outstanding debt.
Division Two of Part Five of the Code modifies the common law rights of the lender and sets out protocols for enforcement proceedings under a credit contract.
A 6Q Notice must be issued if the credit provider intends to disclose information about a default to a Credit Reporting Bureau as part of their debt collection process. They must issue a new 6Q Notice where a full balance is due and payable if the previously issued notice was only for an arrears balance.
The next step before a default can be listed in the debt recovery process is to issue a Section 21D Notice. Unlike a 6Q Notice, a 21D Notice cannot be incorporated into another notice, and must be issued on its own. It is a notice that states the credit provider intends to disclose default information to a credit reporting body. The amounts stated in a 21D Notice must be over 60 days in arrears.
14 days after issuing a 21D Notice the Credit Provider can report the defaults stated in the notice to a Credit Reporting Bureau. If they have not reported the default after 3 months, they must issue another 21D Notice to report these defaults.
The notices pursuant to section 21D and 6Q are not required for Commercial default listings.
After the 30 day period granted by section 80 notice has expired, a lender can then commence enforcement proceedings. For secured contracts, this will involve employing a repossession agent to seize and sell any secured goods.
There are a number of restrictions on a lender’s right to repossess secured goods.
Remember that these restrictions only apply to mortgaged goods. Mortgagee possession of real property follows different procedures, normally culminating with a writ in the Supreme Court.
Less than 25% owing on the contract under s 83 of the Code, a lender cannot repossess mortgaged goods if the current balance of the loan is less than 25% of the amount of the credit provided, or $10,000.00 (whichever is the lesser)
However, the lender can nevertheless repossess if:
The Court consents to the repossession
The loan is a continuing credit contract (although these are rarely if ever secured over goods)
The lender believes that the debtor has disposed of, or intends to dispose of mortgaged goods, or that urgent action is necessary to protect the mortgaged property
Entry onto residential premises under section 91 of the Code, a lender or its agent cannot enter onto residential premises to repossess mortgaged goods unless:
The Court has authorized entry
The occupier has consented in writing, after being informed in writing of the provisions of section 91
Consent under section 91 can only be obtained from an occupier if the lender complies with r 24 of the Consumer Credit Regulations 1995.
For the purposes of section 91 of the code, consent by the occupier of premises to entry to the premises is taken to be given only if the following provisions have been complied with:
A request to the occupier for entry to the premises must be made by the credit provider or agent by application in writing or by calling at the premises concerned.
If the request is made personally, it may only be requested between the hours of 8am to 8pm on any day other than a Sunday or public holiday.
The consent in writing must be in form 7 and signed by the occupier.
The written document of consent is not to be presented to the occupier for signature with, or as part of any other document ( unless the other document, or the remainder of the other document contains only the provisions of section 91 of the Code.
Within 14 days after repossession the lender must give the debtor a written notice under section 94 of the Code stating:
The estimated value of the goods
The enforcement expenses that have and will accrue
A statement of rights and obligations as required under the regulations
That the debtor has 21 days from the date of the notice to redeem the goods, after which they will be sold.
A borrower may apply for compensation under section 98 of the Code if the goods were sold for less than the best price reasonably obtainable. Note however that particularly in the case of motor vehicles, lenders will be entitled to sell goods at auctions at wholesale prices, which will be far less than a retail price. So while a client may be outraged at the low price obtained for the vehicle when sold at auction, it will realy be grounds for claiming compensation.
When a borrower falls into default of payment under a loan enforcement expenses and default interest will usually increase the balance of the loan. Sometimes enforcement expenses such as the cost of hiring a repossession agent or debt collector to visit the borrower’s home or make phone calls to the borrower, or the cost of hiring a tow truck driver to assist in repossessing a vehicle can be considerable.
In certain circumstances, enforcement expenses charged to the borrower may be unreasonable and excessive. For Example, if an agent has made a number of fruitless visits to an address which the borrower had disclosed on the contract, each of these visits will be charged to the contract, If it can be proven that the borrower advised the lender of a new residence and therefore the lender was incorrect in sending the agent to the old address, all expenses associated with the visits to the old address would be unreasonably incurred. Conversely, if the fruitless visits were the result of the borrower failing to advise of a new address, the expenses will all be recoverable lawfully.
If unreasonable enforcement expenses have been charged to a borrower, application to the Credit List of the Victorian Civil and Administrative Tribunal can be made by the borrower under section 99 of the Consumer Credit (Victoria) Code asking for a determination of the borrower’s liability or a refund of amounts already paid.
Information provided by Consumer Credit Legal Service