Why your bank says NO to Hardship assistance
Posted on 26 jun 2018
Some banks are better than others, in terms of Hardship Assistance, Commonwealth Bank (yes, Commonwealth Bank) in my view lead the bunch in quality service, with Westpac a close second. There are inconsistencies in how the banking industry interpret the Hardship Laws and how they flex their Hardship Policy in case by case events.
Take for example one client of ours, they owed significant unsecured debt with one residential and two investment properties, fully mortgaged and no equity.
They have two teenage daughters, one with Brittle Bone Disease, many broken bones and surgeries. The second daughter has cancer but recovering in a positive direction after having her Colon removed.
Our clients drained their savings, equity and super to pay for 26 surgeries, medical equipment, and nursing care. Often, they must leave work for an hour to attend to their daughter’s school and wheel her to the bathroom, the school has limited recourses.
This family is facing financial ruin and exhaustion.
How the banks responded to debt help:
To their credit, Macquarie, Westpac and Citibank approved full debt waivers on their credit cards, after very hard negotiations from our side. Yet, one other major bank refused to do more than a measly 10% discount.
Same client, same credit facility, same spending patterns on all cards and same age.
Why? Each bank has their own interpretation of what hardship is and how it can be remedied by their customer, this interpretation has formed their Hardship Policies on how to deal with the consumer in financial trouble. There are many lower and middle bank managers that acknowledge the fallibility of the policy and will sometimes flex it to approve cases that would otherwise be rejected.
In our client’s case, the bank that refused to negotiate was due to the client having two investment properties. Yet, the other banks sensibly recognised there was no point in selling when the act would likely create a loss and further hardship for the family.
It’s unfortunate, the odd bank will consider policy as infallible, opting to force a square peg in the round hole and call it assistance, sticking to decisions that serves no justice or relief to some families.
So, when you need debt help and the bank is considering a Hardship case, they will generally stick to a well written policy when examining each case. At times, they’ll approve on out of policy decisions which requires them to flex their decision making into an uncomfortable direction.
Yet, in most cases, they must be pushed and prodded carefully and sensibility will prevail.
This article should not be considered legal advice, but as a general guide only. If you are facing legal recovery action, please consult a legal attorney to assist you. For further information on how to have your debts cut by half or more through a specialist negotiator, reach out to us on email@example.com or contact us on 1300 490 030.