. 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 Clauses govt.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 bankruptcy ready/ 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: personal-loan 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?

Creditor’s 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

Creditor’s Proposals: Disadvantages  Require a solicitor to file them  Solicitor’s 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 children’s schooling  Shaun is paid monthly; therefore his budget uses monthly figures