It never fails to surprise me how unreasonable some credit providers can be when a client is experiencing financial hardship. What is very disappointing is how many people end up with negative credit listing such as payment default when they have already told the credit provider they are having financial trouble. Unfortunately, a growing issue in Australia is with Credit Providers Not Helping Their Clients.
The truth is credit providers have a legal and moral obligation to assist their client recover from a financially challenging time, all too often though the credit provider elects to do nothing and their clients ends up in even worth shape as their financial hardship is likely to be worsened by the fact their credit score is lowered due to an adverse credit listing made by the creditor third party such as a debt collection company.
It is very important to note that in most cases once a borrower informs a credit provider they are experiencing financial trouble the credit provider must not only offer assistance but also stop any recovery action such as the listing a payment default. The National Consumer Credit Protection Act and the Banking Code of Practice are very clear that a credit provider must take their clients circumstances into account and offer assistance. This assistance can take a number of forms such as a Moratorium (a hold on payments for a period of time) or a reduction of interest and charges.
The fact is that doing nothing is not an option. However, this is often what ends up happening.
Another example of what we believe is obstructive behaviour is credit providers insisting that the client completes often complex and lengthy forms when applying for relief under financial hardship. Having seen many of these forms I often think that they are designed to be so hard to complete that it provides the credit provider with a way of declining the application and not helping their client.
We have made financial hardship applications on behalf of our clients and supplied all the relevant supporting documents such as proof of income, bank statements, evidence of other debts along with a fully completed calculation based on the Henderson poverty index only to have the credit provider says that they will only consider the application if is made on their application form. It is my opinion that this behaviour is obstructive and only adds to a person’s financial hardship.
In the case of credit repair, I feel it is completely unreasonable to list payment default on a person’s credit file if the person has indicated they are experiencing financial hardship prior.
Unfortunately, it is all too easy for a credit provider to ignore their client’s request for help and list a default on their credit file regardless.
The good news is that many payment defaults can be removed if it is found is was listed after the credit provider was told the client was experiencing financial hardship.
Many credit providers understand their obligation to help their clients under financial stress and not to worsen the situation by commencing or continuing with recovery action including the listing of negative credit listings however some need to take their responsibilities a lot more seriously.