Debt Life Line

Uniform simply means that the same Code has been adopted by all states of Australia, but each statute is regulated by the State. The Code expresses the processes a lender must adopt in dealing with borrowers.

It is important to note that the Code does not cover ‘revolving credit accounts’. A credit card is a revolving credit account because you pay it down and then re-use it. The Code only deals with contractual credit agreements such as personal loans, mortgages and motor vehicle finance agreements.

Some of the important sections of the Code are:

Section 36 (5)

A credit provider must not enforce proceedings on the basis of a default arising from a disputed liability,

Section 46

A security cannot be created over employment or superannuation benefits.

Section 66

Hardship. A contract may be amended where the borrower, because of illness unemployment or other reasonable cause is unable to meet the obligations under a credit contract but who reasonably expects to be able to discharge the obligation (in time) if the terms of the contract were changed by:

• extending the period of the contract and reducing the payments;
• postponing during a specified period the dates on which payments are to be made;
• extending the period of the contract and postponing during a specified period the dates on which payments are due.

Section 80 (1)

Requirements to be met before a credit provider can enforce a credit contract. A 30 days notice must be issued permitting the borrower to remedy any default.

Section 83 (1)

A credit provider must not repossess mortgaged (secured) goods if the amount owing is less than 25% of the credit provided. Importantly the credit provided includes interest.

Non-dischargable debt. Some debts cannot be discharged, other than by payment in full. Even in bankruptcy the following debts will continue to be remedied by collection action.

• Child support;
• Maintenance;
• Fines & penalties imposed under Federal, State or Local statute eg. speeding fines
• Victim of Crime orders.

Stale debt is a debt that remains owing in a creditors books of account but on which there has been no reduction, by payment, in a period of six (6) years. Collection of such debts is statute barred under the Statute of Limitations.

However, in seeking to apply this it is important to realise that it will not apply if:

• A Civil Court Judgment has been obtained in respect of the debt and 12 years has not elapsed; or
• If you ‘refresh’ the debt by making any payment whatsoever – even $1.00.