Did you know that if you’ve borrowed money for a household, domestic or personal purpose, you have massive body of laws to protect you? Dominique Grubisa, founder and CEO of DG Institute explains how the National Credit Code can help you get out of a loan if it’s unjust, vary the terms of a loan, or change a loan if you’re in any financial difficulty, and even get money back on a loan where something has gone wrong, or the lender’s done the wrong thing.
If you’re having trouble with debt, it may be that you have a lot of consumer rights that you’re unaware of. There is a massive body of law called the National Consumer Credit Code, and it comes under an act of Parliament called the National Consumer Credit Protection Act, either way, I’m going to call it all the Credit Law.
This body of Credit Law is available to protect you, and help you, and give you massive rights and bargaining power against your lender if you’ve borrowed for a domestic, personal or household purpose, what that means is that it’s not a business loan, it’s not a bank overdraft to prop up your business, nor a loan that you’ve used for investment purposes, however, it’s categorized as an investment purpose that comes under the Credit Code if it is for an investment property that’s of a residential nature.
In other words, the law protects you if you bought a residential investment property. The law sees that as a domestic personal or household purpose, so you come under the Credit Code.
The first thing to know is lenders hate the Credit Code. What will happen is they’ll often try and make you, if you borrow in a company, sign a disclaimer that says the credit code doesn’t apply to this loan. Even if you’ve signed a disclaimer, the law will look behind that and it will look at the actual loan and the purpose of the loan, and you can still get the protection of that Act.
What can the Act do for you? The Act applies if you got hardship on the loan.
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1) “Hey, I’m having a hard time, I can’t make my payments for the next six months, let’s work out how we can change this loan.”
2) “Hey, this loan’s unfair. It’s unjust. You never should have given it to me in the first place. Let’s alter the amount. Let’s knock some money off the loan.”
3) “I’d like to pay the loan out, but I want a discount. I want cents on the dollar.”
4) “I want my interest rate changed. I want penalties, charges changed.”
You’ve got a lot of power to fight back if you come under this body of law. If the bank won’t talk to you, and they’re playing silly buggers, you can go to the Australian Financial Complaints Authority, or AFCA.
AFCA is an external dispute resolution system. What happened was the law said, “Hey, this isn’t fair. People can’t fight in court when they’re in debt, and banks are mucking around. They can’t afford to pay a lawyer. They don’t understand the law to do it themselves.”
Hence, a body as of November 2018 called AFCA was created, where you don’t have to be a lawyer, you can submit a complaint about a lender online, and you can have someone hear it in AFCA, either an adjudicator, an ombudsman who’s not a lawyer – who’s not going to ask for strict evidence, they’re just going to say, “Tell me about it.”
Often they’ll do it on the telephone. They’ll get the bank on the line, and they’ll mediate. First, they’ll say to the bank, “Give me someone in your complaints resolution department to sort it out.”
They’ll ask you to go away, and you’ll get a whole different level of service from your lender, where they’re there to resolve the complaint. The reason for that is they have to pay for these complaints, and it’s free to you as a borrower to use this service.
Any decision that AFCA ultimately makes like a refund of money payable to you, or changing or varying the loan, is binding on the bank. They can’t appeal to a court. They can’t even take that to court. That’s the end of it. But, for you the decision need not be binding. If you don’t like it, you can walk away and it’s as if it never happened. It is very, very powerful. It can even stay or stop legal proceedings where the bank have sued you in court. It can throw a spanner in the works, and stop those proceedings, and have AFCA adjudicate that outcome.
It’s a really, really powerful mechanism, and body of law under the National Credit Code, and those credit laws to protect you as a borrower. The aim of that is to level the playing field because banks and lenders are too powerful and the little guy has no leverage to fight back. This gives you the muscle to really rattle their cage if you know your rights, and you know what’s possible.
If you want to learn about property investment and property development in Australia, join Dominique Grubisa for this upcoming webinar and learn how you can find undervalued property that you can potentially purchase 10% – 40% below market value from motivated vendors.
Lawyer, Asset Protection Specialist and Property Educator
Dominique Grubisa is a practicing legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at email@example.com
This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.