This information is for people who have debts or who are having trouble with money because of the effects of natural disasters such as bushfires or floods. It will explain your legal rights and options, and has the contact details of organisations that may be able to help you. It can be downloaded here.
This information cannot replace legal advice. Getting legal advice about your individual situation is important.
What if I am having trouble paying my debts because of bushfires/floods?
What should I do first?
Tell your creditor about your situation as soon as possible. Also see a financial counsellor. A creditor is the person or organisation to whom you owe money. You can try to change your repayment plans with the creditor. See below for how to do this.
How can a financial counsellor help me?
A financial counsellor can help you work out how to pay back your debts, write up your budget and liaise with creditors. They can also give you names and numbers of other services which may be helpful, such as for family support or to overcome gambling or personal problems.
For contact details for financial counselling services see below under the heading Where can I get more information or help?
Can I vary my loan contract due to hardship or financial difficulty as a result of bushfires/floods?
Individuals and small businesses can ask their credit provider (lender) for assistance where, for a short period of time, they are unable to meet their repayments under a credit facility. A credit facility includes a credit card, personal loan, home loan, a business loan or overdraft facility.
Options for hardship variation include:
- more time to pay (called “extending the length of a loan”) and making smaller repayments over a longer period
- extending your loan and postponing your repayments for an agreed period, or
- delaying repayments due on specific dates for an agreed period.
For a home loan depending on when you took it out there are different thresholds for accessing a hardship variation. See the MoneySmart website for details of these thresholds. Even if your loan is above the threshold the credit provider may still agree to vary the contract.
How do I apply for a hardship variation?
You can phone or write to the credit provider straight away requesting a change to your repayment arrangements. A financial counsellor or legal service can help you do this. Keep a copy of the letter you send. If you ring ask to speak to a “hardship officer” or to “customer service”. Keep a record of when you ring and who you speak to.
Give the details of your loan. You should provide as much relevant information as possible including the change you want, the reasons for hardship, your current income and financial expenses, how you will repay the loan and over what period of time.
The lender is more likely to accept your request if it is reasonable.
If you have a business debt, you can still try to change your repayment plan with your creditor.
You should continue to pay whatever you can during negotiations.
After you apply for a hardship variation, the credit provider must respond to your request within 21 days letting you know the outcome of your hardship request (unless more information is needed from you). The credit provider can ask you to provide information relevant to deciding whether you are or will be able to meet your obligations under the contract or how to change the contract if you are or will be unable to meet the obligations. You must give this information within 21 days.
After you provide this information the credit provider must let you know it's decision on your request within 21 days. If your credit provider refuses your application it must give reasons in writing.
If you are not happy with the response you can ask to speak to their internal dispute resolution section.
For more information on hardship variations visit the MoneySmart website or the Financial Ombudsman Service website.
Do I have to make mortgage payments if my house was damaged, destroyed or if my situation has changed because of bushfires/floods?
You still need to pay your mortgage but there are steps you can take to make this easier. Contact your lender and try to arrange a hardship variation as outlined above.
What if the credit provider does not agree to my request for a hardship variation?
If you disagree with the decision, if your credit provider is a member of an external dispute resolution scheme (EDR), you can lodge a dispute in writing or online with the EDR scheme. You can do this for free. Keep a copy of your dispute form.
The EDR scheme will be either the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO). You can search online at the FOS website or call 1800 367 287 to check which scheme to lodge with.
These schemes have thresholds based on the amount of variation sought.
What is external dispute resolution?
The Financial Ombudsman Service (FOS) and Credit and Investments Ombudsman (CIO) are free, independent EDR schemes that resolve disputes between consumers and lenders.
The lender cannot start or continue legal action while your matter is being considered by an EDR scheme except:
to the minimum extent necessary to preserve legal rights, or
unless the action is too advanced and the EDR scheme considers that the court is a more appropriate place to deal with the dispute.
What if the dispute is not resolved through EDR?
If you are unsuccessful in EDR or your lender is not in the EDR scheme you may have the option of taking legal action for a court ordered variation. Get legal advice before doing this.
Help from banks and other creditors
Many “lenders” (the creditors that lent you money) should be offering you hardship variations. Contact your lender for more information on these options and to see what other help they may offer. As a general rule, lenders should not be offering you a refinance, credit increase or extra loan at this time. These increase your debt. You may have trouble paying back this extra money.
What can my creditor do if I don’t pay the debt?
Usually a lender can take you to court to get an order for you to pay the money you owe. You may have to pay legal and enforcement costs.
What if a court action is threatened?
If you have received a default notice and/or the lender is threatening legal proceedings, (for example, if you have received a letter of demand), you need to act urgently. You should immediately:
1. Phone or write to your credit provider requesting:
- a hardship variation if you have not already requested one, or
- your lender negotiate a postponement of enforcement proceedings (if the National Credit Code applies you must do this before the end of the period specified in the default notice).
2. Lodge an application in writing or online immediately to one of the two EDR schemes:
Let your credit provider know that you have done this.
3. Get legal advice.
What if I have been given court documents?
If you are served with court documents (for example a “complaint” or “writ”), get legal advice urgently. If a dispute is lodged with the FOS or the CIO there are limits on a credit provider’s ability to take further steps in current legal proceedings. See above under the heading What is external dispute resolution? The credit provider should stay proceedings if you inform them a dispute has been lodged.
Contact Legal Aid WA’s Infollne on 1300 650 579 for information and referral or the Consumer Credit Legal Service on (08) 9221 7066 for advice and help. Do this as soon as possible. You will only have a short time to do something before a court order may be made against you requiring you to pay the money you owe, plus interest and court costs. If the debt is your home loan, a court will usually also order the repossession of your home.
To find out if a court order has been made against you, you can order a copy of your credit report, which will have this information. Your credit report also has information about your credit history, including requests for loans (including applications for mobile phones and utilities), late payments and unpaid debts.
Note: if you request your credit report, your contact details will then become available to any lenders who check your report. Veda, CheckYourCredit.com.au (Dun & Bradstreet) and Experian are the largest credit reporting bodies operating in Australia. You can contact them and request a copy of your credit report. They generally require that the request be made in writing. For contact details go to Credit reporting.
Can I access my superannuation to help pay my debts?
How do I check if I am eligible?
While it is rare to get your superannuation early, you may be able to get part of your superannuation early on compassionate grounds if it is used to stop your lender selling your property or other specific special circumstances. You will need to contact your superannuation fund to see if it allows early release of superannuation under any circumstances. If it says yes, then you can apply through the Department of Human Services (DHS) (Cth). You will need to meet the requirements and have the necessary proof.
Some people on certain Centrelink pensions can apply to get their superannuation early due to severe financial hardship. You can apply directly to your superannuation fund for early release. Centrelink’s role is to respond to requests for confirmation of your income support payment status and has no involvement in determining financial hardship, or deciding if superannuation benefits are to be released.
Contact the DHS Early Release of Superannuation Benefits Branch on 1300 131 060 or go to the DHS Centrelink website for information on early release because of severe financial hardship and on compassionate grounds, including mortgage assistance, and to obtain the application form required.
A financial counsellor can help you with applying in the first place.
You may have to pay tax on your superannuation if you get it early. Contact the Australian Taxation Office on 13 28 61 for an interview to find out how much tax you may have to pay.
Where can I get more information or help?
- Australian and/or State Government assistance may be available if the impact of the bushfires/floods/storm meets the criteria to be declared an “eligible natural disaster” for the purposes of Natural Disaster Relief and Recovery Arrangements. In this case you may be able to get more information from:
- Contact the Department for Child Protection and Family Support (CPFS) on 1800 032 965 for help available for individuals and families.
- You can download brochures from the CPFS website on dealing with the effects of a traumatic event and disaster and emergency support services under the heading Emergency services and Emergency relief services or contact your local CPFS office or call (08) 9222 2555 or 1800 622 258 (country fee call).
- Contact Legal Aid WA’s Infoline on 1300 650 579 for information and referral. Other information sheets dealing with the effects of natural disaster are available, for example, on insurance claims.
- Contact the Financial Ombudsman Service (FOS) disaster helpline team on 1800 367 287 for help and information on financial hardship, insurance claims and other financial issues experienced as a result of natural disasters. Call the FOS to register a dispute between you and your insurer if it cannot be resolved with your insurance company. A dispute can also be registered online with the FOS. Make sure you tell FOS that you are a disaster-affected customer when you register your dispute. A fact sheet: Natural disasters: are you experiencing financial difficulty can be downloaded at its website.
- If you are having trouble paying your utilities bills (gas, water, or electricity) due to financial hardship you may be able to get assistance from the WA Government Hardship Utilities Grant Scheme (HUGS). More information is available at the CPFS website under the heading Services in the community.
- See the Department of Human Services (Cth) website for Centrelink assistance for those affected by natural disasters.
- For legal advice on credit related issues, contact the Consumer Credit Legal Service WA on (08) 9221 7066, Monday to Friday, 9.00am to 4.00pm.
- For counselling and support seven days, 24 hours a day contact LifeLine WA on 13 11 14 or contact Beyond Blue on 1300 224 636.
- Contact the Financial Counselling Helpline on 1800 007 007. It is a free confidential service for all Western Australians with financial problems and queries.
- Visit the Fair Work Ombudsman (FWO) website or contact the FWO on 13 13 94 for information on employment entitlements during natural disasters including a fact sheet.
- The Australian Securities and Investments Commission’s MoneySmart website has hints on what to do if your home has been damaged or destroyed by a natural disaster.
- For information on tax issues in dealing with disasters visit the Australian Taxation Office website.
- For other Legal Aid WA information sheets on other legal issues and natural disasters click here.
- Community Online Resource Essentials (CORE) are free interactive resources about the law for use by people throughout Western Australia. They contain step by step practical information, including checklists and "how to" videos by experienced lawyers. Mortgage stress- a self help guide is now available. There are five parts to this guide:
- Mortgage stress self help guide – Overview
- Part 1 Mortgage Stress
- Part 2 Trying to avoid court by using external dispute resolution schemes
- Part 3 Heading to court
- Part 4 After court.
Visit the CORE webpage today to find out more and register.
Last reviewed: 21/12/2016