Can a credit contract really be re-negotiated? Get back in control of your debts

In many cases the answer is yes.

When a credit contract is entered into, the details of the agreement are documented and agreed on by the associated parties.

Using the example of a credit card contract this includes the amount of credit available, the interest rate attached to the product and various other terms and conditions.

When the credit card is used the minimum payment due would be related to the interest rate attached to the product. The question is what happens if a person is unable to meet the minimum payments due?

This situation is quite common and can be caused by a number of circumstances such as loss of employment, a collapse of a business or illness or separation.

In such circumstances a person may apply for financial relief and this may take the form of the terms of the contact being altered. Offering financial relief to consumers in legitimate circumstances is a legal obligation for most credit providers and they generally will talk their responsibilities to help a consumer very seriously.

If approached in the correct way, a credit provider will consider altering the terms of a contract in favor of a consumer. There are a number of ways a credit contract can be adjusted such as a change of interest rate, an extension of the loan term or even lowering the amount owed.

When first approached a credit provider will most likely not agree to alter the term of a contract, they are more likely to agree to stop all payments for a period of time, usually two to three months to allow the person time to get back on their feet. If the situation is unchanged after this period, and the person is still unable to maintain payments at the level required under the contract, the credit provider may then agree to adjust the terms of the contract to better accommodate the persons financial position.

It is important to keep in mind that liabilities such as credit cards and personal loans are usually unsecured debts which means the recovery of debt under such a contract can be very difficult for a credit provider, for this reason they are typically motivated to help the consumer recover from their financial situation.

Many people are unaware that in the right circumstances credit contracts can be adjusted and for this reason many people don’t even attempt this when they run into financial difficulty.

There is currently little public awareness around Hardship provisions and a credit providers legal obligation to assist a consumer that is experiencing financial difficulty, for this reason many people continue to suffer financially when there are legal and legitimate methods to help elevate financial stress.

Just Budget are leaders in debt mediation and have assisted many people recover from financial stress by dealing with their creditors and their credit contract, helping them to setup and manage realistic budgets and administer payments to their creditors.

John Dickinson

Just Budget Pty Ltd

 

Call Just Budget now for a free consultation that will NOT impact your credit file 1300 795 775 or enquire online

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