Borrower Hardship Assistance

Assisting Borrowers Facing Financial Hardship

Borrowers who fall into financial hardship should be treated with care and respect.

Credit unions and mutual building societies support the Government’s initiative to ensure that all borrowers experiencing financial hardship are treated according to some common standards of assistance by lenders.

Credit unions and mutual building societies have adopted the borrower hardship principles agreed between the Government and the four major banks, with some variations and additions to reflect the features that distinguish our sector from the major banks.

These distinguishing features are our mutual status, smaller size, commitment to personal service and record as responsible lenders.

Our customers are our owners and are treated accordingly.

Download "Borrower Hardship Principles" here 44.70 Kb

Find your credit union or mutual building society –
13 11 28 assistance line

If you are facing financial hardship, we encourage you to contact your credit union or building society as soon as possible, to seek their advice on options to deal with your circumstances.

To get contact details for your credit union or mutual building society, click here, or call the Abacus toll-free number on 13 11 28 if you need further assistance in finding your credit union or mutual building society.

Your legal rights as a borrower

Your basic legal rights as a borrower are set down in the Uniform Consumer Credit Code.

Under the UCCC, borrowers can apply for changes to their credit contract on the grounds of hardship.

Although this provision only applies to borrowings up to a threshold - currently $312,400 and rising to $500,000 later this year - credit unions and mutual building societies will try to assist you whether or not you have a legal right to seek a hardship variation.

Under Section 66(1) of the UCCC, a borrower who is unable reasonably, because of illness, unemployment or other reasonable cause, to meet the borrower’s obligations under a credit contract and who reasonably expects to be able to discharge the borrower’s obligations if the terms of the contract were changed in a manner set out in subsection (2) may apply to the lender for such a change.

The three options under s66(2) for changing the terms of the contract are:

• extending the period of the contract and reducing the amount of each payment due under the contract accordingly;
• postponing during a specified period the dates on which payments are due under the contract; or
• extending the period of the contract and postponing during a specified period the dates on which payments are due under the contract.

If the lender does not change the contract in accordance with an application made by a borrower, the borrower may apply to a relevant court or tribunal to change the terms of the contract.

Financial counselling services

Financial counsellors can help you get back on track in terms of your financial commitments, and can guide you in dealing with lenders. For access to financial counselling services in all States and Territories, go to the Commonwealth Financial Counselling Directory or the Australian Financial Counselling and Credit Reform Association.

Managing credit – Consumer Guides

For helpful information on managing credit as well as practical suggestions on dealing with financial hardship, download our booklet Credit Wise. Credit unions and building societies have also issued a consumer guide to help with budgeting and saving, Dollars and Cents, to help manage your finances.