Loans and credit cards

If you are worried about keeping up with repayments on your loans (such as a home loan or car loan) or on your credit card, don’t wait until you have fallen behind. Take action early, before a lender or credit card provider begins legal proceedings. If debt collectors are chasing you, ask a financial counsellor for advice.

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Talk to your loan provider

Tell the organisation you owe money to (the creditor) that you are experiencing financial hardship because you or a family member has cancer. The creditor may agree that you can:

  • stop making repayments for a short time, such as 6–12 months
  • make lower repayments for a short time
  • change to interest-only repayments for a specified period
  • pay by instalments
  • reduce the total amount owing
  • extend the term of the loan.

Making a payment arrangement as soon as possible can protect your credit rating. Your credit history and rating are recorded in a ‘credit report’ by a credit reporting agency. If you apply for a loan in the future, the lender will usually ask your permission to check this credit report before approving the loan.

How to apply

Contact the creditor to make a payment arrangement. Make sure you get it in writing and check what interest and fees you’ll need to pay. Speak to a lawyer or financial counsellor if you need help understanding the documents. If you cannot reach an agreement, you may be able to apply for a hardship variation (see next heading).


Apply for hardship variation

Another option for repaying loans and credit cards is to apply for a hardship variation. This is a formal process where you ask your credit provider to vary the terms of your loan contract.

Depending on when and where you entered into the loan and the amount, you may be able to seek a hardship variation if:

  • your loan is for a personal purpose, not a business loan (home loans, personal loans and car loans usually qualify), and
  • you can reasonably repay the amounts agreed under a varied loan contract (maybe you are planning to return to work after treatment, or you can pay off your debt over a longer term), and
  • you can’t make your repayments at the moment because of illness, unemployment or some other reasonable cause.

When you apply for a hardship variation, you can ask for reduced repayments or a complete hold on repayments until your situation has improved. Your credit provider may ask you for further information about your finances to help them with the decision.

Work out what you can afford to pay before you talk to creditors. If you agree to an amount, it is difficult to go back and change it to a smaller amount, but you can always pay more if you find you can afford to. Remember the creditor is only focused on the amount you owe them. You may have other creditors to pay back as well.

Getting a hardship variation can protect your credit rating. If you get a variation agreement early and you are up to date with the lower repayments, the bank can’t record it on your credit report.

If your financial hardship is long term and you won’t be able to reasonably repay the loan, you may need to consider other options, such as a compassionate grounds debt release, selling assets or – as a last resort – bankruptcy.

How to apply

Write to or call your credit provider and explain that you are unable to meet the current repayments. You can also ask a financial counsellor to negotiate on your behalf.

The credit provider must respond to your request, usually within 21 days. If your application is refused, the credit provider must give written reasons. If you think the reasons provided are unfair, you can complain via an external dispute resolution scheme.


Get advice before refinancing

You may be considering rolling all your loans into one to manage your repayments. This is called consolidating or refinancing.

Be careful of businesses advertising debt agreements to avoid bankruptcy. Sometimes, unscrupulous lenders take advantage of people in financial difficulty. They might offer refinancing or debt consolidation deals that can lead to more problems. They charge very high establishment fees and interest rates, and make the loan term very short, even for a big loan. This is called predatory lending.

How to apply

Before you refinance, get independent advice from a financial planner or financial counsellor. If you think you have a loan with a predatory lender, it’s important to seek legal advice immediately.


Ask about credit card repayment protection

You may have credit card repayment protection, which will help cover repayments if you’re not able to work due to illness, permanent disability or death.

How to apply

Check your credit card statement or speak to your credit card provider to find out if this applies to you.


Ask if you're eligible for debt release

In some special circumstances, your creditor can decide to write off (waive) your debt altogether. This is known as debt release on compassionate grounds and is rare. It is usually an option only for people who have been on Centrelink benefits for a long time and who have no assets except household goods and tools of trade.

How to apply

If you think you may be eligible, ask a financial counsellor or a community legal centre to help you apply to have your debts released. Debt release can affect your credit rating, so discuss this with them before proceeding.


External dispute resolution schemes

Almost all credit providers belong to an external dispute resolution (EDR) scheme. EDR schemes allow you to have disputes resolved by an independent party without any cost to you and without going to court.

Both the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman (CIO) provide EDR, but you can only use the one that your credit provider has joined. To check if your credit provider is a member, you can visit FOS at fos.org.au/resolving- disputes/find-a-financial-services-provider or call them on 1800 367 287, and visit CIO at cio.org.au/members/search-members or call them on 1800 138 422.

You can also find more information on the EDR process at moneysmart.gov.au.


Is the debt secured or unsecured?

When you owe money, the debt may be secured or unsecured. This affects what action the lender (creditor) can take to get their money back if you stop making repayments on the loan.

  • Secured debt – This is a debt that is secured against a particular asset. When a bank lends you money, they may take ‘security’ for the debt. That means that if you stop making repayments, the bank can take certain property (called the ‘security property’) and sell it to recover the amount you owe. A home mortgage or car loan is a secured debt.
  • Unsecured debt – With this type of debt, if you stop making repayments, there is no particular asset the creditor can take and sell. They must go to court (see next heading) and get an order for your valuables to be taken and sold to pay off the debt. Credit cards and personal loans are usually unsecured debts.

What to do if a creditor takes you to court

  • Get professional advice straightaway –  If you receive an official court document, such as a statement of claim, you will have only a limited time (usually 21 or 28 days) to file a formal response at court. If you disagree with the claim, you need to lodge a defence. If you need legal help, you can search for your nearest community legal centre by postcode at naclc.org.au,or ask your financial counsellor to refer you.
  • Check whether you can make a payment arrangement – If you do owe the amount in the claim but are not in a position to pay it, you can try to negotiate with the creditor. You may also have the right to get the statement of claim put on hold and bring the dispute to an external dispute resolution (EDR) scheme. This may give you an opportunity to make a payment arrangement. You should seek the advice of a financial counsellor or lawyer if you think the dispute could be referred to an EDR, or if you are unsure.
  • Never ignore a statement of claim – If you don’t file a formal response or appear at the hearing, the creditor can get default judgement against you. This means that the court will order you to pay the money to the creditor. If you don’t, the creditor may be able to take some of your income or assets to repay what you owe.
  • Check the statement of claim is genuine – Sometimes, debt collectors can give you documents that look like a statement of claim, but aren’t. This is fraud and is against the law. If you are not sure whether the statement of claim you have received is genuine, check with a lawyer.

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Apple devices

The iBooks application must be installed on your Apple device before you can read the EPUB.
Different ways to download an EPUB file to your Apple device:

  • email EPUB files to yourself and transfer the attachment to iBooks.
  • copy EPUB files into DropBox (or a similar service) and use the DropBox app to send them to iBooks.
  • open EPUB files directly from Mobile Safari and open them in iBooks, where they are saved automatically by downloading the EPUB from the website.

Need more help? Visit: http://support.apple.com/kb/HT4059

Kobo

To download an EPUB file to your Kobo from a Windows computer:

  • download and save the EPUB directly onto your desktop.
  • connect your Kobo to your computer using the USB cable and tap “Connect” on your eReader.
  • select “Open folder to view files” to view the contents of your Kobo.
  • navigate to where you have stored your EPUB file in “Finder”, in documents or downloads, and drag and drop it into the Kobo window. You can now disconnect your Kobo to read the eBook.

To download an EPUB to your Kobo from a Mac:

  • download and save the EPUB directly onto your desktop.
  • connect your Kobo to your computer using the USB cable and tap “Connect” on your eReader.
  • open your “Finder” application.
  • select “Kobo eReader” from the listed devices to view the contents of your Kobo.
  • navigate to where you have stored your EPUB file in “Finder”, probably in documents or downloads, and drag and drop it into the Kobo window. You can now disconnect your Kobo to read the eBook.

Turn on your Kobo and your EPUB will be located in “eBooks”, while a PDF will be located in “Documents”.
Need more information? Visit: http://www.kobo.com/help/koboaura/response/?id=3784&type=3

Sony Reader

To download an EPUB file on your Sony Reader™:

  • ensure you have already installed the Reader™ Library for PC/Mac software
  • select the eBook you want from our website and click the link to download it.
  • connect the Reader™ to your computer.
  • open the Reader™ Library software and click “Library” in the left-hand pane and select the eBook to view it.

Need more help? Visit: https://au.readerstore.sony.com/apps_and_devices/

Amazon Kindle 2nd Generation devices

EPUB files can’t be read on the Amazon Kindle™. However, like most eReaders, Kindle™ 2nd Generation devices are able to display PDFs. We recommend that you download the PDF version of this booklet if you would like to read it on a Kindle™.
To transfer a PDF to your Kindle™ via USB cable from your computer or Mac:

  • download the PDF directly onto your computer.
  • connect the USB cable to your computer’s USB port, and the micro USB end of the cable to your Kindle™. Note: the Kindle™ won’t be available as a reading device while it is connected to your computer until it has been disconnected.
  • open the Kindle™ drive and several folders will appear inside. The “Documents” folder is where you will need to copy or drag the PDF to.
  • safely eject your Kindle™ from your computer and unplug the USB cable. Your content will appear on the Home Screen.

Kindle also provides a Kindle Personal Documents Service that allows users to send documents as an attachment directly to your eReader. For more information on this service, visit http://www.amazon.com/gp/help/customer/display.html/ref=help_search_1-1?ie=UTF8&nodeId=200767340&qid=1395967989&sr=1-1
For more information on accessing a PDF on your Kindle™, visit www.amazon.com/manageyourkindle, log in to your account and click on Personal Document Settings.
Need more help? Visit https://www.amazon.com/gp/help/customer/display.html?nodeId=200375630

Android and PC

You can also download and open eBooks on Android devices and PCs with appropriate apps or software installed. Suitable eReader apps for Android include Google Play Books, FBReader and Moon+ Reader. Suitable software for PCs include Calibre and Adobe Digital Editions.


This information was last reviewed in October 2015
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