There has been significant changes to the laws surrounding financial hardship over the past twelve months. These laws talk about a credit providers legal obligation to assist a client that is experiencing financial difficulties.
If a borrowers situation changes which results in them having trouble keeping up with their debts their credit providers are under a legal obligation to assist them recover. This assistance can take a number of forms such as a term were no payments need to be made, commonly known as a moratorium, or the adjustment repayment terms to accommodate for the borrowers financial circumstances. Regardless of what the credit providers does to help the main point is they are unable to do nothing, in other words if a borrower asks for help they must offer assistance, saying “we can’t help” is just not good enough although sadly this does happen. When a borrower asks for help due to financial hardship the credit provider is entitled to ask some questions, the most important being what has coursed the financial hardship and what will change in the future. The second question is critical as if the credit provider feels their clients financial situation will not change in the future they are able to reject a financial hardship application.
Due to this is very important for a client applying for financial assistance to keep this in mind before they contacting the creditor. I good example would be a couple were both parties were working, if one person lost employment this would bring them down to one income and that would most likely course financial strain, one would expect this to be short term however as given that person found other employment the situation would improve in the future and they should be able to resume normal payments on their credit facilities. Another example would be when someone becomes ill and is unable to generate an income for a period of time.
How does all this relate to credit repair ?
When a borrower contacts a credit provider and asks for help given financial hardship the credit provider must at least consider the request tasking into account their clients situation, not what they might like to do from a commercial standpoint. A key point is they must stop or not commence any recovery action including listing a negative credit listing such as a payment default during the financial hardship term.
This means that any negative credit listing must be removed if it was found that the listing was made after an application for financial hardship was made.
This actually goes one step further. If a borrowers payment history shows there could be a problem and the credit provider did not take a proactive stance and enquire if the borrower was experiencing financial difficulty and as a result commenced recovery action and listed a payment default on the borrower’s credit file there is a genuine argument that the default listing should be removed as the matter was not dealt with appropriately and in accordance with the relevant legislation such as the National Consumer Credit Protection Act.
Given it is quite common for credit providers to not offer the necessary levels of financial relief and list defaults against their clients there are many people suffering due to inappropriate credit file listings.