I don't want to go to court - Mortgage stress

Mortgage stress logoIf the lender has started court proceedings, you may still be able to resolve your dispute through the Australian Financial Complaints Authority (AFCA).

Lodging a dispute with AFCA can give you time to negotiate with the lender and put court proceedings on hold. This could involve reaching an agreement to repay the arrears, making a hardship variation, asking for time to sell your house privately (rather than a forced sale by the lender), or trying to access your superannuation.

If those steps are unsuccessful and you do not want to defend the claim in court, you may need to prepare to vacate the property. 

Going to AFCA after court proceedings have started

You might want to go to AFCA to lodge a dispute about a hardship variation, or to get more time while you negotiate with the lender.

The lender cannot start or progress legal action while your matter is being considered by ACFA. The exceptions to this include:

  • to take the minimum steps necessary to preserve the lender's legal rights, or
  • where legal action in defending the action has progressed beyond you (or another party to the proceedings) lodging a defence or a defence and counterclaim, or
  • enforcing a default judgment obtained in court.

Even with these exceptions, the lender needs to get AFCA's consent.

Court proceedings do not automatically stop when a dispute is lodged with AFCA. You need to make sure the lender is aware you have lodged a dispute if you want court proceedings to be stopped. When it receives a compliant, AFCA will notify the lender in writing of the complaint.

What if I cannot reach any agreement with the lender?

If you are not able to resolve things through AFCA, you should start making arrangements to vacate the property. If you are willing to vacate the property, you can contact the lender to see if you can reach an agreement about the timing of your leaving.

It may be possible to reach an agreement with the lender (or its lawyer) to give possession or pay the amount owed before the lender gets judgment against you. In this case, the lender may still apply for a judgment against you, but the sooner the matter is finalised, the less you will need to pay in legal costs.  

What if an agreement to vacate the property or repay the arrears is reached?
  • The lender’s lawyer will prepare a Memorandum of Consent Orders, and file it at the Supreme Court with a letter asking for a hearing before a Registrar. The court will allocate a date for the hearing. 
  • You will need to appear before the Registrar on that date.
  • The Registrar will then make the consent orders.

This will still be a judgment against you, which can be enforced by the lender.

What if I have already put my property up for sale?

You should contact the lender’s lawyer to see if you can make an arrangement about judgment, possession or both. The lawyer's name and contact details will be on the Writ, or you may have received a letter with contact details of someone who can discuss the matter.

What if I don’t reach an agreement and do not put in a Memorandum of Appearance?

If you do not put in a Memorandum of Appearance to defend the claim, the lender can apply for a 'default judgment' against you, on the basis that you are not trying to defend the claim. The lender or the lender’s lawyer may, but does not have to, contact you to discuss the matter before lodging an application for default judgment with the court.

If you do lodge a Memorandum of Appearance, but are not disputing that you are in default and have no arguable defence to the lender's claim, then it is likely that the lender will apply for judgment against you before the matter progresses towards trial. This is called applying for summary judgment. 


The information displayed on this page is provided for information purposes only and does not constitute legal advice. If you have a legal problem, you should see a lawyer. Legal Aid Western Australia aims to provide information that is accurate, however does not accept responsibility for any errors or omissions in the information provided on this page or incorporated into it by reference.