There are instances where you may find it extremely difficult to repay the debts owing to unemployment, illness or for various other reasons. In such cases, you may approach the bank for availing the benefit of ‘hardship variation’ facility. Of course, it may be very difficult to define hardship. Yet, in the year 2009, the Commonwealth Government approved increase of monetary threshold or assistance to help you to come out of such financial constraints. This is a unique resolution of Commonwealth Government, which has helped thousands of people facing serious financial difficulties.
A way to lead stress free life:
Further, in order to come to the aid of those facing serious financial difficulties, even the Government of Australia in the year 2012 passed a legislation called the Consumer Credit Legislation Amendment (Enhancements) Act 2012 (Enhancement Act). All these are intended to provide enough opportunities for every individual to fully avail the benefits of financial hardship arrangement and thereby lead a comfortable and stress free life.
What constitutes hardship
Although it is very difficult to define hardship, it is generally construed to be a case of not having enough money to meet the living expenses. Further, such financial constraints should be caused due to certain involuntary acts resulting in a sudden decrease in income. The ideal example could be a loss of job, layoffs and layouts. At the same time, the financial constraints should be temporary in nature like those caused by an unforeseen increase in expenses caused by illness.
If you are suffering from temporary financial hardship, then you can approach the appropriate financial institution and seek various remedies to tide over the situation. In such cases, the benefits that are available to you are extension of time or duration of loan, reduction in interest rate, reduction of the monthly installment and freeze on interest or a temporary stoppage of installments. In some cases, the banks may not allow freeze on interest. For more details please visit this site https://www.debtmediators.com.au/personal-debt-solutions/financial-hardship/
Realistic assessment of your repayment capability:
In order to avail these benefits, you should do your homework and make an assessment of your repayment capability. The thumb rule is never promise the bank an amount or installment that you cannot repay. At the same time, you should be aware that your eligibility of hardship benefits depends on how the financial institution construe or define hardship. Normally, the banks will analyze the facts on the merits of each case.
The benefits of financial threshold:
In addition to these, you can also avail the benefits available under the rules of hardship threshold, which can help you to tide over the temporary financial difficulty. Now, the question arises as to what is a hardship threshold. According to Sec.88 (3) of the National Credit Code, the banker has an obligation to inform the debtor that he has a right to seek changes in the repayment pattern. Of course, such changes are subject to certain conditions. True to the spirit of hardship threshold, such information will help you to avail the benefits and thereby tide over the temporary financial constraint. Normally, in such cases, depending on your repayment capability, the banker will provide you the financial assistance even if the credit amount exceeds the threshold limits.