. Welcome To Debt Solutions The Goat, The Wolf and The Cabbage Debt Solutions: Objectives To Consider Hardship under the CCCFA and Kiwisaver To Consider Debt Consolidation as a Form of Managing Multiple Debts To Look at Creditors Pools and Proposals To Look at Mortgagee Sales, Caveats and Charging Orders Hardship under the CCCFA These provisions were introduced in 2009 Allow for a reasonable variation to credit contracts Payments must be up to date to qualify Must be able to meet payments under the new agreement GE Money Eligibility An account must be at least 9 months old before a variation takes place. A variation can only be applied once in a 12 month period and twice in a five year period. The customer must demonstrate the ability to meet the lower repayments agreed. The account cannot be written off. 1. Short-term (temporary) Generally between 2-12 months in duration. Fixed term loans - monthly installment reduced by reduction in the applicable interest rate. CreditLine facility - minimum monthly payment is agreed Interest is suppressed for the agreed hardship period. 2. Long-term (permanent) Nature of the hardship is likely to extend beyond 12 months. A new minimum monthly payment is agreed. Payments made for a period of time to show commitment and ability to pay before the variation is processed. 3. Special Extensions Used for non-delinquent fixed term personal loans - account is frozen for a period of up to 3 months. Must sign new contracts for each month of the extension period. GE Money Hardship team ALLPAAPS Clauses Enforcing All present and after acquired property clauses in credit contracts is illegal. Creditors must specify their security interests and detail these on the contract. Repossession of unspecified household goods and personal items is not legal under the CCCFA 2003. ALLPAAPS Clausesgovt.nz/ pdf- library/letters/letter- creditor.pdf Hardship under KiwiSaver Must have suffered significant hardship Unable to meet minimum living expenses Need to provide care for a family member Need to make home renovations due to illness or injury Providers do not have to agree to reimburse you Only get own and your employer contributions not the government funds Hardship under Kiwisaver Must apply directly to the provider Providers often ask for budgets Must apply if considering a NAP and sometimes for SIO and bankruptcyready/ get-money/early/ Other Budgeting Options: Renegotiating with creditors Debt repayment holidays see CCCFA hardship A reasonable variation to a credit contract as per the CCCFA SIOs and NAPs Things to Check On: Has the underlying problem been solved? (Over-spending, Impulse Buying) What is the Interest Rate? What are the Repayment Terms Does the Client understand the contract? Does the client have a bad credit history? (This can lead to higher interest rates and a refusal to lend by some banks) Check out Comparative Costs at: https://www.asb.co.nz/Calculators/Get-a- personal-loan https://www.asb.co.nz/Calculators/Get-a- personal-loan Mindy and Maurice Mainline Is Debt Consolidation a good option? What issues need to be considered? What Budget Advice would you give? Are there any possible hardship options? Creditors Proposals: Advantages Debts can exceed $40,000 Work on the same repayment system as an SIO a percentage in the dollar amount The debts are frozen when the proposal is filed no more interest is added Repayment terms of 3- 5 years Joint applications can sometimes be filed Covered by the Insolvency act and have full legal protection as a court proceeding Secured debt can be included Creditors Proposals: Disadvantages Require a solicitor to file them Solicitors costs Outside of the scope of most budget services Also involves a charge to cover solicitors fees and budget services only offer free services Majority of creditors in number and 75% of value need to accept Shaun Davidson Shaun is married with two children His wife was recently made redundant She was responsible for many of the household bills. Shaun is unsure how much they spend on some basic expenses They rent their house in an upmarket suburb and are unwilling to move as it will disrupt the childrens schooling Shaun is paid monthly; therefore his budget uses monthly figures