The top 10 things your clients need to know about credit and debt


Good morning everyone. Thank you for joining
us today and welcome to the 10 most important things that your clients should know about
credit and debt. Now we’re very excited for today because this
is Legal Aid Queensland’s first official webinar. So thank you for joining us and welcome. My
name is Katherine Lamont Bowden and I’m the Community Legal Education Officer for Legal
Aid Queensland. Before we begin the presentation I’d just like to run through a few house rules.
Please make sure that you’re muted throughout the presentation. We’re going to go through
a 30 minute presentation after which we’ll have 20 to 30 minutes for question time. Now
if your question isn’t answered please look to the handout section and within that you’ll
see the webinar email address. If you guys can just email us through then we’ll get back
to you and please feel free to download the handout anyway.
So to ask a question on the panel you’ll see the ‘Questions’ box. If you just drag that
out and type in your question we’ll get to those at the end. Okay so first of all I’m
going to run a poll. If you can just tick ‘yes’ or ‘no’ to this. Okay and feel free to answer now. Okay. Just a couple more people to answer. Okay. Great. Thank you guys for that. That’s
great. I’d now like to pass you over to Legal Aid Queensland’s Senior Lawyer within the
Civil Justice Service Paul Holmes. He’ll talk to you about the 10 most important things
that your clients should know about credit and debt. Please welcome Paul.
Paul Holmes: All right. Good morning ladies and gentlemen.
Welcome to the 10 most important things your client should know about credit and debt.
So just before I go into too much debt it’s important to give this bit of context and
the things we’re talking about today are things that over the nearly decade I’ve been doing
this area of work, either that the clients I deal with least understand or cause the
clients we deal with the most stress. So the earlier we get this information out to the
clients we will collectively deal with, the better that is for the clients and the more
likely that is to lead to a better result. So to begin the webinar what we’re going to
look at are the things that are now coming up on screen. And in that context some of the really important
things that we’ll talk about is well just what happens if one of our clients can’t pay
the debt and things like well what happens in a family law situation where what we’re
talking about are what I call sexually transmitted debt where you might have gone into a joint
loan with a partner and not been able to in a sense divest yourself of that when the relationship
ends. And then to finish some of the other really important things we need to talk about are
things like well what are credit reports, how do they effect whether our client can
borrow or not and what if anything can be done in dealing with defaults that were incorrectly
listed on a credit report. Then the final thing I want to deal with today is this idea
that a lot of clients have, that body corporates and local councils when it comes to rates
and body corporate fees have to act in the same way as banks. As I’m sure a lot of us
know that’s not necessarily the case. So to start with the world doesn’t end if your clients can’t pay their debts and one
of the really important things we need to talk about here is a lot of our clients come
to us and think they could go to jail if they do not pay their civil debts. Now there’s
exceptions for things like child support and other government debts but when it comes to
credit cards, when it comes to loans, when it comes to all those type of debts going
to jail is not something that is a result or a risk your client has, but unfortunately
it is something that periodically we hear companies tell people who are behind on their
loans that if they don’t pay they could go to jail. That quite rightfully causes people
a lot of stress. Similarly the other stress that is caused
to people is some creditors and I’m happy to admit it’s not all, will tell people that
“If you don’t pay your debt we’re coming to take your bed”, or in probably the worst case
I’ve ever seen they threaten to take a little old lady’s cat. Obviously when that’s the
only thing or the most precious thing you’ve got in your life and someone is threatening
to take it, even though they can’t, of course you’re going to miss out on things like food
or paying the rent in order to ensure that you keep it.
But what that does lead to is a really important question. If they can’t do those things what
can they actually do and what they can actually do if somebody can’t … in a worse case scenario
if somebody can’t pay their debt that they owe is they can take the person to court.
Once they take the person to court our clients would usually get served with a claim and
statement of claim. In response to that they’ve got 28 days to respond with a defence and
the difficulty for our clients is nine times out of 10 they owe the money. So in terms
of a substantive defence to the court action, they probably don’t have one. So if it gets
that far and the Ombudsman that we’ll talk about later is unable to help, the position
we’re left in is they’re likely to get a judgement. Once they have a judgement what they can ask
the court for is that our clients undertake an examination of judgement debtor where they
have to fill out really detailed paperwork about their financial circumstances and that
will either show that they have capacity to pay some money towards the debt or that they
don’t. In circumstances where they don’t the court
is unlikely to order them pay a certain amount of money out of their Centrelink for example
when it’s obvious they can’t afford it. But it’s really important to remember though in
Queensland that once they have a judgement they initially have six years to try and recover
the money. So if our client say, gets a job or goes back to work they might then have
to start paying the debt and if they’ve been unsuccessful in getting the money in six years
they then have an opportunity to apply to court for another six years with which to
recover the debt. So it’s really important to be aware of all of those issues. The next issue that’s worth talking about
is this idea about basic household possessions which I’ve touched on a little bit earlier.
In Queensland if you get taken to court and there’s a judgement against you the court
can’t order or the creditor can’t take for that matter basic household possessions such
as your TV, your children’s clothes, as was listed on one contract a doona cover of the
child – all of that basic stuff that you need to live is protected in the same way that
it’s protected if the client was to go bankrupt under the bankruptcy legislation because the
law recognises that you need a certain amount of basic things in order to live and in order
to be successful in our community and believes that if you were to take those away that would
lead to greater problems for our society. So that protection is a really good thing.
The only thing where this would not apply is the idea where say, a car is secured against
a loan. If the car is secured against the loan then the creditor can repossess that
car and use it and sell it and put the proceeds towards paying off the debts that our clients
owe. Thirdly is this idea about hardship and what I regularly see and it happens often unfortunately,
is somebody will either lose their job or they might fall ill and they’ll apply to the
creditor for hardship. Sometimes if they’ve already had that hardship once the creditor
will go “Well no you can’t have it because you’ve already received hardship from us on
a previous occasion”, and the reality is the law doesn’t say that. It’s really important
to be aware of that. The law actually focuses on whether or not
one, that you’re in hardship and two, whether or not you’ve got a viable way out. It does
not matter if you’ve had hardship three, four, five, six times during the loan so long as
you’re able to show that it’s a short-term experience which you’re able to now catch
up on any arrears that you fell behind. It’s a different story if the hardship is long-term.
For example if you’ve been out of work for two years it’s difficult to argue that you’re
going to get a job shortly which will allow you or enable you to be able to catch the arrears up.
So it’s really important to be aware that although the hardship is set up it’s set and
you are able to access it more than once. The reality is if it’s a long-term change
in circumstances hardship probably doesn’t assist you.
However in circumstances where your clients might be under great stress I would see no
issue with approaching the creditors and asking for time to sort their financial circumstances
out because that would then allow both yourselves and the people who are in the situation to
make a good decision about what the best result is for them in the circumstances. It’s important
though to be aware though that by accessing hardship, the effect of that is often that
what is owing on the loan increases and the time taken to pay off the loan similarly also
increases. So now moving to this idea of a statute barred debt. Now it’s important to be aware of the
fact that a statute barred debt occurs in Queensland if you have not made a payment
for more than six years. However if a debt is statute barred and you make a payment towards
the money owing then the debt becomes live again and the creditors have another six years
from when you last made that payment to recover the money owing on the loan. The reason this
gets tricky for the people we deal with is there’s no obligation in law on the creditor
to tell our clients that a debt is statute barred. What you often see are phone calls
where a debt collector or the creditor might ring up and say “If you just make one payment
we will leave you alone”, and the reason they’re happy for you to just make one payment and
then will leave you alone is that then gives them another six years to recover their money.
So of course they’re quite happy for you to be left alone for a couple of years and then
they’ll follow you again in two or three years. They have no issue or no problem with doing
that. So it’s really important to be aware of that. Now this next one, number five, is one that
I know causes me a lot of grief when talking to clients and I’m sure it causes a lot of
you grief out there as well. The advent of the internet has led to people being able
to put views about how credit and debt works on the internet that might not necessarily
be true. So what happens is you might encounter people who believe that because they’ve received
bad service they don’t have to make repayments or they’re going to stop making the repayments
until that slight of the bad service is remedied. Or they might believe they can keep their
house and not make any repayments because there’s a small error on the mortgage. In
those circumstances what usually happens unfortunately is we see those clients when it’s very hard
to recover from that situation because what they do is they don’t make the payments for
three, six, even 12 months. The creditor takes action in court and is
about to take a person’s house off them and at that point when you haven’t paid your mortgage
for 12 months there’s not an awful lot that you or I can do to stop that. So it’s important
really early if you encounter people who are talking about these sorts of issues to make
it really clear. You might well have received some really bad service and lord knows we
all do at times or at least feel we do, but that at law does not absolve you from a responsibility
to pay your debts and to make the repayments which are due and payable under your mortgage
or your loan or your credit card. If we can get that message out as early as possible
that’s going to save our clients an awful lot of grief because at the moment many of
them are doing their internet research and coming up with what I’ll call the wrong end
of the stick about what their responsibilities are.
The take-away message on this one and it’s a really important take-away message from
my point of view is that you might receive bad service and you might feel that you’re
entitled to some remedy for that, but the way of getting that remedy is not to stop
paying. The way of getting that remedy is to continue meeting your legal obligations
and then take that point up with the management of the company which you’ve received the bad
service from. Now the next issue is what I call sexually transmitted debt and I know it’s not a great
phrase but that’s the practical reality of what it is because what you see is people
in all good faith enter into a relationship and then enter into joint responsibilities
whether it be through a loan to get a house or a joint credit card or a joint personal
loan, or even utilities bills in the belief that the relationship will last and that it
will be successful and ongoing. Unfortunately as we all know not all relationships
succeed and the problem we see is people make what they believe is a genuine effort to meet
their responsibilities under the relationship and having paid half of the joint debts are
wondering why the creditors are still coming after them. For people who’ve made that genuine
effort it’s a really hard conversation to have with them that “Well that might feel
fair to you but the law’s set up that where you’ve got a joint loan what a creditor can
do is they can choose to come after either one or both of the parties to a joint loan
to recover all of the money that’s owed under the loan which is what’s called a ‘joint and
several liability’. So what that can lead to unfortunately is circumstances where one
party to a relationship might now either be bankrupt or have no money and that will leave
the creditor to go “Okay I can’t get or recover my money from you and instead what it will
allow me to do is I can come after the one person in the relationship which I know has
money.” So what you see is the creditor seeking to recover all of that money from one of the
people to the joint loan rather than both because it’s their decision and not the debtor’s
decision who they come after for all of the money which is owing on the loan.
Unfortunately that’s happening more and more. If we can it’s important that people who enter
into these joint loans are aware of that before they do it. If they’re not aware of it before
they do it, that they find out about those issues as early as possible when a relationship
ends because that then allows them to make good decisions about their own financial circumstances
given what they know of their now ex-partner’s financial circumstances. So it’s really important
I think to be aware of those issues as well. Next and this is causing I know a lot of consumers and particularly vulnerable consumers big
issues out there in the community and that’s this issue of credit reports. So for those
of you who might not know about the credit report all of us have a credit report which
details information such as if we’ve ever defaulted on a loan, the types of loans we’ve
applied for and more recently what’s called positive credit reporting about whether we
meet our own repayment obligations on time. The theory about this is it allows the banks
to make a good decision about whether or not we’re a good risk to lend to when we apply
for a loan or when we apply for a particular service eg a mobile phone. Where it goes wrong
for people is if they do default what that means is once a default is listed on your
credit report it becomes very difficult to access credit or to access the type of loans
you want at the type of interest rates you want because mainstream credit is unlikely
to lend you. So what they then go searching for is reasons
or the ability to get that default off your credit report and in those circumstances they
have been known to go to what I’ll call credit repair agencies because credit repair agencies
in previous times have offered the ability to remove defaults or to at the very least
assess your credit report for, it’s usually a fee of $1,000 to $1,500. Now there’s a couple
of things to say on this issue. The first thing to say on this issue is the idea that
there’s only certain circumstances when you can actually have a credit default removed
from your credit report and they include things like where you’re never owed the debt at all
and it happened to be issued against a wrong person, where there might be a wrong amount
listed on the default and then you can correct the record or where you weren’t given an opportunity
to catch your arrears or catch your default up before it was listed on your credit report.
If it’s not one of those circumstances legally you can’t remove the default and the problem
with that is people have been taking up the offer for services who have the ability or
say they have the ability to remedy the defaults, paying them $1,000 and $1,500 and then not
actually having the default corrected because legally there’s no ability to take that default
off your credit report. That’s causing people a lot of grief and in
the worse case scenario that I’ve encountered I had one client told me that what the company
said to them is “I know you can’t afford to pay me for remedying the defaults now but
once we clear your credit report then you should take a loan and then you’ll be able
to pay us our money.” Obviously that’s not the ideal circumstance when you’re dealing
with people who are already in financial trouble. Suggesting that they then take a loan out
is not in anybody’s interests. The other point to be aware of is that there
are many clients out there who believe that once they pay a default that’s enough to have
it removed and the reality is that’s just not the law. What happens is if you have a
default listed and it gets paid the only change you can have made to your credit report is
that it be altered on your report from an unpaid debt to a paid debt. It still remains
on your credit report for the five year period that it was originally destined to be up there
for. Now these issues are really central today
to a lot of people because people accessing credit or feel that they need to access credit
are having difficulty doing it because of these defaults and are seeking the opportunity
to have it corrected so that they can engage with society and unfortunately that’s just
not happening because the law does not allow defaults to be taken away in those circumstances. Now to move to the idea of the Ombudsman,
now I know there’s a number of people online who are already very familiar with the Ombudsman
but for the benefit of those who are not it’s worth having a good chat about the Ombudsman
particularly in the financial services space. Now in order for banks and other lenders to
operate out there in the community what they need to have or what they need to be a member
of is one of two Ombudsman, either the Financial Ombudsman Service or the Credit and Investments
Ombudsman. Now from a consumer perspective there’s a number of reasons why the Ombudsman
is a really good thing. Now firstly all complaints made to the Financial
Ombudsman or the Credit Ombudsman can be made for free to all consumers. That’s really good
because they’re not exposed to any risk of court costs if they feel that they have to
pursue the issue in court. The other thing that’s really good is that more recently both
Ombudsman have made a really substantial effort to cut down the timeframes it’s taking them
to address disputes and my experience of both Ombudsman at the moment is those disputes
are being resolved very quickly and are being resolved in a way that usually gets a fair
and reasonable result for consumers. However it’s worth saying that not all disputes
will end up in the Ombudsman and the reason not all disputes will end up in the Ombudsman
is before you can go to an Ombudsman you first have to engage with what’s called the Internal
Dispute Departments of the creditors you’re dealing with and they’re required to have
an opportunity to see if they can resolve your dispute before you make an Ombudsman
complaint. In the number of years I’ve been doing this a lot of those companies’ internal
dispute departments have got significantly better than they were at addressing consumer
complaints and coming up with what are fair and reasonable results before you need to
escalate it to the Ombudsman. Having said that one of the really important
things to be aware of though is once you’ve made one attempt to have the internal dispute
resolution area look again at your complaint and they’ve either said “no” or they’ve made
a decision and said “We need to escalate it”, you don’t actually need to remain in there.
Companies have one opportunity after they’ve made an initial decision to see if they can
resolve dispute. Do not fall into the trap of going through what I call multi-tiered
IDR which still a couple of companies are guilty of doing. If it has not resolved after
you’ve raised a complaint with the internal dispute area you are within your rights to
go straight to the Financial Ombudsman or to the Credit and Investments Ombudsman. Now
you might ask “How do I find out which Ombudsman my creditors or my client’s creditor is a
member of?” and the answer is there’s a couple of ways of doing that.
One is you can go to both websites and they have a member list which you can type in and
search. Your other option would be to go to the ASIC website which is the Australian Securities
and Investments Commission where they have a list of everybody who has a credit licence
and which Ombudsman they’re a member of. Failing that my experience is generally that if you
ring one of the Ombudsman and you end up with the wrong one they’re generally more than
happy to help you engage or get to the other Ombudsman for your complaint. So it’s really
important we engage with all of those issues. I would recommend the Ombudsman because my
experience of running case law through them is that they do provide what is a good and
balanced result for consumers when they are not being dealt with well by the creditors
or the lenders which they’re engaging with. The one caveat I’d put on that is I do give
a lot of advice to consumers where I say things like “Look you have no rights because the
creditors have done the right thing”, and in those circumstances I don’t … going to
the Ombudsman doesn’t really help the client because all it does is delay the inevitable.
If you’re in that sort of quandary I welcome you contacting us because often hearing those
sort of issues from a different voice who’s not dealing with you directly allows the client
to take a bit of a bit step back and address those issues themselves. Now the final substantive issue I wanted to
talk about is this issue of body corporates and local councils. In terms of body corporates
and local councils where I see this going wrong is this idea that people have that because
banks have to give hardship and have to give good consideration to hardship body corporates
and local councils do too. The reality is there’s nothing in the body corporate legislation
and there’s nothing in the local council’s legislation either, the Local Government Act
in Queensland, that actually requires them to give anybody hardship at any point in time.
That’s a very difficult thing for people to engage with because what they’re not also
aware of is that if you don’t pay your rates or if you don’t pay your body corporate either
of those organisations can actually take you to court and seek an order or follow a process
whereby that house can be taken. Now I’m aware some local councils don’t take
those steps until somebody is more than three years behind in their rates but I’m also aware
that a lot of local councils don’t have that as an issue either. So they often see people’s
houses being taken where they might only be $1,000, $2,000, $3,000 behind on their rates.
That’s a really … it feels like a really big penalty to people who might be losing
their house over a $3,000 debt but the reality is it does happen and it happens unfortunately
regularly. So the earlier we get people aware of these issues the better it is.
Similarly with body corporates the issue there is all that’s needed there to start the court
action is agreement of the body corporate committee to start the court action and pursue.
Does that mean though I recommend not ever engaging with either of those bodies on hardship?
Of course not but what it does mean is when you are engaging with them you need to have
in the back of your mind that the bargaining position that the consumer has when it comes
to engaging with hardship and negotiating about hardship is significantly less than
the circumstances where they can engage all the bargaining power they have with banks.
It’s because of the bargaining power consumers have with banks they forget that they don’t
have the same rights with councils and body corporates. Now finally and most of you … there’s a
number of you online who I engage with quite regularly about this and that is Legal Aid
does provide assistance and help on these issues. The handout that we’ve put up does
have the direct email and phone numbers of each of the three lawyers in the Consumer
Protection Unit who can help with these issues. Please do not give those contact details directly
to clients. Those contact details are there for you guys that if you have any questions
at any stage you’re welcome to engage with any of the three of myself, Catherine or Loretta
and either via email or phone. We’re happy to help you out because often what we can
do is say “Yes. It’s us”, and we’ll get them booked in or “No. It’s not but the people
you need to speak to are from this organisation”, because we have those contacts already in
place and would welcome the opportunity to refer people to the right place without putting
them on a referrable merry-go-round. Now what I’d like to do is now that’s
the substantive part of the presentation ended and I’m now happy to open it to questions.
So Katherine took everybody through at the beginning how to ask questions. So if there
are any questions out there can you please type them in and we can start looking at those
questions? But in the mean time I can continue talking about a couple of issues while we’re
waiting for people to type those questions in and for those questions to come through.
One of the other issues that’s really important for people to be aware of is an issue around
direct debits that I’m seeing a lot of recently. What often happens when we’re dealing with
vulnerable consumers is this idea that the companies have set up direct debits either
from their bank account or from a credit or debit card and that ensures that the companies
are getting their money coming out either the day of or the morning of a person’s Centrelink
payments or their wages are coming into their bank account. That’s all very well for the
companies but what we see it often means is people then have $40 or $50 for the fortnight
to pay for food, transport and other basic necessities which sees them relying on community
services and community support in order to survive.
Now what your clients should be able to do in those circumstances is they’re entitled
to walk down to the bank and say “I want people to address”, or “I want this direct debit
cancelled” and if the bank says “No” they’re actually in breach of the Banking Code which
means people are able to take that up with the banks and get their direct debits cancelled.
Now I notice some questions coming through. So one is “How quickly does it take Legal
Aid to address the problem they’re encountering?” The first issue there is that the Consumer
Protection at Legal Aid will generally get a person an appointment in a week for advice.
At the moment it’s now Friday and their advice appointment’s available on Wednesday. In circumstances
where it’s urgent we address those issues then and there. It’s really important to address
those urgent issues then and there. Another issue that’s talking about is small
business. Unfortunately small business is not something Legal Aid’s able to assist with
because it’s just not something we’re funded to do. The only free service I’m aware of
that’s available for small business is the Bond University Law Clinic that’s run out
of the Gold Coast. So I would recommend you get in contact with them. If you want to know
those contact details please send me an email afterwards and we can put you in contact with
them if you’ve got a client you think it would help.
On the issue of statute barred debts there’s the issue raised is “What happens if they’ve
gone missing?” and the answer is if they’ve gone overseas that time probably doesn’t run
but if they’re just difficult to find that’s on the creditor to find.
I noticed there’s a question about caveat and property law. Unfortunately property law
when it comes to beyond mortgages and things like that, that’s something somebody has to
seek a private legal advice about. That’s unfortunate but it’s just not something we’re
able to do. On the issue of other companies not offering
financial hardship, so what we’re talking about there is phones, utilities, credit card
companies will all engage with people when it comes to alternative arrangements. For
example I’m aware of a company in Victoria which has such a hardship arrangement whereby
people if they make five dollar payments they’ll get matched by the company towards paying
off their arrears and in those circumstances what their figures say is that matching program
where they keep it up for six months and then reduce the debt a little bit actually sees
the figures where I think it’s 80% of people never have to enter hardship again with that
company which I think those sort of hardship programs I reckon are really, really important
because they allow people to be able to engage with the issues of getting their lives back
on track while still paying the debt. Now there’s another issue about a client being
pursued by debt collectors for somebody else’s debt where they’ve provided the wrong details.
In terms of those issues I’d recommend that person get legal advice because we probably
should be helping that person write a letter to the debt collector with the appropriate
proof to show it’s not their debt and it wasn’t them because if they’re continuing to harass
somebody who doesn’t owe the debt they’re actually in breach of the Debt Collection
Guidelines and they’re actually in breach of what they’re required to do under the law.
So I think it’s really important that people in those circumstances where they’re being
pursued and harassed by debt collectors get that legal advice. The other person that it’s
important to deal with there is this issue of well, how do we engage with the debt collectors
through regulators such as ASIC or the ACCC? Other questions about small business … in
terms of what assistance community workers and financial counsellors can give to people
in a small business situation there’s a suggestion about a fact sheet. I quite like that idea
of a fact sheet and it might be something we pursue with people like QPILCH and some
of the firms who provide assistance to QPILCH up here towards developing a fact sheet around
those issues because I think it’s a really good idea.
Another question that’s come up is this idea of how much information a financial services
provider can reasonably ask for. Look that’s a matter of degree because you want to give
a financial services provider enough information to allow them to make a good decision or to
prove that you’re actually in hardship because if you don’t give them enough information
to show that you’re in hardship what happens instead is they’re likely to say “Well on
the information you’ve given me I can’t prove it”, or “You can’t prove to me that you’re
having difficulty making the repayments.” By the same token I have seen financial hardship
questionnaires from a couple of companies that run for 50, 60 and in some cases 70,
75 questions and to me that seems unreasonable because you can’t possibly require that amount
of information in order to make a sensible decision about whether somebody’s got the
ability to make those repayments. What you need is the bank statements showing
your income and expenses and in my view a brief discussion about what the circumstances
have changed or how they’ve changed such that you’re now in hardship. That to me should
be enough for an FSP to make a sensible decision about that and if they don’t accept that,
that to me is when you go to the Ombudsman, when they’re asking for more than is necessary
to make those repayments. Another question that’s linked to that is
do creditors have to accept a repayment amount even if they’re just willing to pay $5, $10
or $20 a week? Look the answer is that’s a difficult question and the reason that’s a
difficult question is if all you were going to do for 12 months is pay $20 a week because
that’s all you can afford then that’s going to put you significantly behind on that loan
and probably make it difficult for you to ever catch the arrears up. But for example
if you’re going to be out of work for three years, or pardon me for three months and you
can only afford to pay $20 a week for those three months but you’re going to be back in
work and able to pay what’s due and a little bit towards the arrears after that third month
or that fourth month then that’s a reasonable hardship proposal. But if it’s just $20 a
week on its own it’s probably not. There’s another question up here about tenancy
and I know one of the difficulties community workers and financial counsellors have is
a lot of those organisations that provide a tenancy advice lost a lot of funding. So
where it’s a direct tenancy issue I know some of those organisations are either just started
or about to restart their advice service. However in terms of the insurance company
chasing the tenant I know that’s an issue whereby the insurer might have paid out on
a landlord insurance and is now going after the person who can’t afford it. It’s important
to be aware of there that when it comes to the Insurance Code of Practice there’s actually
a requirement in there that if your client’s in hardship the insurance claim should be
addressed. The insurer is required to consider that person’s hardship before they make a
decision to pursue that person. Another issue around SPER and whether SPER
is really … SPER would become statute barred after six years. Unfortunately the rules around
civil debts don’t as I understand it apply to SPER. SPER is what I call a unique being
and has its overalls about how debts can be collected, in what circumstances SPER can
pursue you. One of the problems we see a lot of in south-east Queensland at least is the
issue of tolls. That causes an enormous problem because not only do they have to pay the tolls
they don’t pay but you often see them paying admin fees and you often see them paying various
levels of admin fees on each and every two dollar or three dollar toll they haven’t paid.
What that results in is people owing $10, $12 or I think the highest I’ve seen is $15,000
as a result of not paying tolls of a few hundred dollars. That causes enormous strain and when
they don’t pay it, it can end up as SPER debt. I’ll have to take the question about a ticket
listing on notice. I don’t know the answer to that one straight off the bat. So we’ll
get back to you on that. Another question that’s come through is about
a reluctant credit provider when the credit listing is paid. So the process for dealing
with a creditor who’s not engaging with you when the debt’s now paid and you want to correct
the record, your first step as the questioner seems to have done is go back to the credit
provider and say “Okay. Do you agree this debt’s now paid? If so can we amend the record
that’s on Veda or Dun & Bradstreet to show that the debt is now paid?”
Now in those circumstances if they say “no” your next step is to go to the credit reporting
agency. So I’ll use Veda as an example and Veda has a complaints process that’s set out
on www.mycreditfile.com.au whereby you can lodge a complaint with Veda, say “The credit
provider is refusing to change the listing and here’s the reason why they should.” Then
Veda investigates and if you don’t get it removed at that point there’s the ability
to complain about Veda or Dun & Bradstreet. In those circumstances though where I find
it’s a dispute about unpaid or paid debt, the listing will often … you often get the
listing changed by Veda if the credit provider is unwilling to do it. So it’s really important
to be aware of that. Now keep those questions coming through because
we’ve still got another five minutes worth of questions if people want to take that time
up. But another issue that people have been raising with me is the issue of training colleges
whereby people are being approached outside Centrelink offices or in shopping centres
and being signed up in the past couple of years to a training course with the promise
of a free laptop or with the promise that there’s a guaranteed job at the end or it
won’t cost them anything. What I tend to find in those circumstances
is people don’t have it explained that what they’ll actually have rather than not having
to pay it up front is a debt to the government through the help or the government arrangements
for helping you through your uni or your TAFE course. The problem people have with that
is that they end up with … and you will have seen it in the media … debts of up
to $20,000 for courses that they might not have been able to finish. It’s particularly
difficult whereby the person might be a recently arrived migrant who has English as a second
language. I’ve seen people signed up to courses there to complete business courses when they’re
still completing a basic English course. Obviously they’ve got no hope whatsoever of ever being
able to complete that course. Now if you have examples like that I am aware
the ACCC which is the Australian Competition Consumer Commission is interested in hearing
those stories and having complaints where appropriate about those things because it
does seem unfair to me that people are being signed up to a course that they would never
have been able to complete or a course which does not deliver or does not provide the assistance
or services that it was advertised to provide. So it’s really important to be aware of that
as an issue as well. The final issue which is somewhat another
question about is this issue of consumer leases. Now consumer leases come in a couple of forms.
We see them where people end up leasing a car that they thought they might be buying
or that they end up leasing issues or they end up leasing basic whitegoods such as washing
machines or TVs or other basic appliances they need, believing that they would own it
at the end. Now a couple of issues to talk about there. One is there’s legal arguments
available if they were told by the person that was signing them up that they would own
it at the end, even if the contract does not say so.
The other issue is that if people try and get out of these leases early because if they
complete them they’ll end up paying four, five, six times the value of the good and
not own it at the end. The termination fees can often be very large and if you’re seeing
people potentially having to pay large termination fees I would recommend you get legal advice
about those very quickly because they may have rights under what’s called the Unfair
Terms Legislation because for example to me it’s unfair that somebody who leased a computer
for a week is being asked just as an example, for a $1,500 termination fee. To me that seems
wrong. Now another issue that’s come through is if
a council has judgement on rates how long does it take for them to be forced to take
sale action? The answer is one of the responsibilities the council has there is to obtain a fair
market price and sometimes they might make the decision that that might require them
spending a little bit of time to clean the property up before they sell it. Or they might
have the recommendation of a real estate agent that if they waited three months on the market
then a better price might be taken. Now if that’s the case I don’t have much of an issue
with them taking a little bit of time but it’s a question that’s going to have to be
determined on a case-by-case basis because it’s important that the clients we’re dealing
with get a fair price for the asset they have because if they don’t get a fair price for
the asset that’s being sold and the council doesn’t meet their obligations what could
happen is the house might sell and it might not pay out all the mortgage or it might not
pay out all of the rates which are owed. In those circumstances what happens after that
is the client can still be pursued for what’s called the ‘shortfall’ under those circumstances.
So that’s a case-by-case basis and if you’ve got a client in those circumstances please
come and talk to us. Now we’re probably in a position where we
can deal with one, maybe two more questions. So if you’ve got those burning questions please
send them through now before the webinar ends. So in terms of I think the big take-aways
I want you to take away for today while I’m waiting on those other questions is I want
you to take away that in Queensland there is that legal help out there and it’s really
important that if you’ve got clients in those circumstances please get in contact with us.
Please also that if you’re not sure whether we can help or not, it doesn’t hurt to drop
us an email, ring us up on the phone and we can say “Yes. It is”, or “No. It’s not”, and
point you in the right direction if we can because we’re happy to provide that service.
Finally the other thing I want you to take away is a lot of this information that causes
clients grief, if you’re in a position to provide that legal information like I’ve discussed
today rather than providing legal advice, we have no issue with that information being
provided and then you referring the client to us for the more specific advice about their
circumstances because I see nothing wrong with us getting these basic messages, particularly
when they’re the messages that cause people grief and concern out there as early as possible
because let’s be honest, if we can take clients out of that worrying grief, that’s enough.
Now there’s a final question come through about what if a mortgagee doesn’t agree to
the sale where the sale price will discharge the mortgage? I’ll have to be honest, this
would be the first time I’ve encountered a mortgagee who hasn’t let a sale go through
when they’re going to get their money. So I’d be really interested in hearing some more
information about the specifics of that because if they’ve done that and then the property
sells for less there’s legal avenues available there to ensure the client is not liable for
the difference between the sale price they had and the sale price the property eventually
sells for. But it is unusual that they don’t do that. Often what you see is they don’t
allow it to go through when it won’t cover the mortgage and then the property ends up
selling for even less. So the shortfall is even larger. But I’m happy to have a discussion
offline about the specifics of that particular example.
So I’d like to thank you all for your involvement and I’d love any feedback about how it’s worked
because obviously being the first one we’d love to make improvements or hear what worked
and didn’t work. Now just to conclude I’ll pass you back to Katherine just to do the
tidy-up. ^Katherine Lamont Bowden:^
Hi everyone. For those who weren’t here at the start of the webinar I’m Katherine, the
Community Legal Education Officer. I’d just like to wrap things up today. I’d like to
give a big thank you to Paul for the great webinar he presented today. I’m sure you’ve
all learnt a bit about the top things your clients need to know about credit and debt.
Just a reminder please download the handout which should have been underneath your questions
toolbar on the right hand side of your screen. So have a read of that. That summarises the
presentation today and as Paul said we’re very keen for any feedback. So at the end
of the webinar when we close the screen a survey is going to pop up. We’ve chosen those
questions. So if you could please answer those for us that would be great. One important
one is if you have any suggestions for topics in the future that would be very handy. We’ve
had a great response rate for our first webinar. So we’ll be definitely doing them again in
the future. So now is a great time to make any suggestions
for other things you’d like to hear about and I can see there were a couple more questions
that have come through. Unfortunately we don’t have time to get to any more today however
if you can please email the [email protected] email address you’ll find that in the handout.
Then we’ll get back to you then. Okay. Thank you very much everyone.
[End of Transcript] The 10 most important things your clients
should know about credit and debt Video Transcript Legal Aid Queensland
Presented by Paul Holmes, Senior Lawyer, Civil Justice Services, Legal Aid Queensland

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