Hardship Package $44
Some Vendor Financiers are confused by the Hardship provisions of the National Credit Code (NCC) and, in some cases know very little regarding what needs to be done if your buyers (borrowers) indicate they are suffering from financial hardship.
Two Sections of the NCC that relate to Hardship applications on the part of the buyer (borrower) are Section 72 and Section 94. It is worthwhile being familiar and compliant with the requirements of these Sections as penalties are attached to these Sections of up to ’30 penalty units’, i.e. $3,300.
The ASIC website says, ‘Section 72 of the National Credit Code …. allows a borrower to request a change to the terms of their credit contract on the grounds of financial hardship. After an application for such a variation is made, the credit provider must give the borrower a written response within 21 days: s72(3).’
Operationally we now send out our Hardship Policy and Application for Financial Hardship to our buyers:
1. as soon as they request a Hardship Variation, or
2. as soon as we believe they may be in Financial Hardship and it seems that sending the Policy and Application would be appropriate.
It is important to remember that you do not have to approve every Hardship Application you receive, especially if your buyer’s position seems unsustainable and/or reduced affordability cannot be overcome.
To assist you with the Hardship issue the Vendor Finance Institute has recently added a sample Hardship Policy and Application for Financial Hardship to our product list.