Michelle had to leave work due to an illness. After leaving work, Michelle realized that it was the particular job that was triggering the depression. She was seeing a therapist and taking medication. She really hoped to get better in a few months with the treatment plan. She rang her mortgage lender and said, “I am in financial hardship. I had to leave my job because of severe depression. I am in a treatment plan. Is it possible for me to change my repayment schedule on the grounds of hardship?”
She offered to provide a medical certificate and asked for the address to send it to. She verbally and on paper indicated that her desire was to be back to work in six months. And the best thing she did, besides open a dialogue with the bank in the first place, was to send as much money as she could to the mortgage lender along with her medical certificate and letter.
Michelle’s note of her conversation with the bank was sent to the lender verifying what transpired over the phone. The lender at first told her, “no.” They did not seem as though they would grant her an extension. But Michelle persisted.
Getting an extension depends on who your lender is. In Australia, there are lenders who offer savings accounts like banks, building societies and credit unions. These lenders are compelled by law to be in an external dispute resolution scheme (EDR) in these cases. Many other lenders are not required to be.
Michelle persisted and got the extension. She found it easier to get a repayment arrangement with her bank than she thought possible. The Code of Banking Practice mandates that banks accommodate loan customers who are experiencing financial difficulty. The Banking & Financial Services Ombudsman reviews any requests for change on the grounds of financial hardship that a bank refuses.
Michelle got in early and her request was reasonable. She also demonstrated that she could repay the loan if the bank would simply grant her request and give her enough time to recover from her illness.
For those seeking the same extension, who are with a non-bank lending institution, this will be a harder task, but not impossible. Those experiencing financial distress should act early and persist, just like Michelle did.
Those who qualify to apply for a hardship variation under the Consumer Credit Code can apply to the Commercial Division of Consumer Trader & Tenancy Tribunal for an order to compel the lender to agree to a repayment deal. This is an important step to seriously consider if the lender is not in agreement with reduced repayment arrangement.
Michelle fully recovered from her depression and she was able to keep her home. A new line of work, a new outlook on life, and a happy ending after all.
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