Hardship Application

Under the Credit Contracts and Consumer Finance Act 2003 (CCCF Act), a borrower has a right to ask their lender for a change to their personal loan, mortgage, credit card or other consumer credit contract, but to be eligible you have to prove the following:

• You have suffered a hardship you couldn’t reasonably have seen coming, such as illness or injury, loss of employment, the end of a relationship, or death of a partner or spouse;

• as a result of that hardship, you cannot reasonably meet your debt repayments to the lender; and

• you believe that you would be able to meet the debt repayments, if the contract was changed in some way.

An application for hardship has to be made in writing, with you having to explain the reason or reasons for your unforeseen hardship, provide evidence to that effect, and details of the changes that you want made to the contract, such as a payment holiday, a longer period to pay, or freezing of interest and penalties.

You can make a hardship application at any time, unless you have:

• been in default for two months or more;

• been in default for two weeks or more from when you first receive a repossession warning or Property Law Act notice; or

• failed to make four or more consecutive debt repayments on their due dates. 

If you need help with this then contact the Debtfix team who can assist with this option.

What Changes can be made?

A borrower can ask for a contract to be changed by either:

• extending the term of the contract and reducing the amount of each payment, or

• postponing debt repayments for a specified period of time (a payment holiday), or

• extending the term of the contract and postponing debt repayments for a specified period of time (a payment holiday).

However, whilst these options will provide temporary relief, they are likely to increase the total amount owing on a loan, as the lender is not required to freeze interest and charges.