Credit and debt: overview
This chapter includes information about the following areas:
- Credit contracts: Hire purchase, loans and other credit – This section explains:
- the new “lender responsibility principles”
- the information you must be given by the lender (or “creditor”)
- your rights to cancel the credit contract
- interest and credit fees
- when and how you can challenge an unfair credit contract
- rules about repayment, including when you can ask the lender or the courts to relax the contract terms because of unforeseen hardship.
- Guarantors – This section explains about guarantors (people who agree to be responsible for someone else’s debt) and the rules and protections that apply to them.
- Debt recovery and enforcement – This explains how lenders can recover debts through debt collection agencies and through the courts. This section includes information about:
- how you can dispute that you owe a debt
- credit reporting
- your rights against debt collection agencies, and
- rules about when and how property can be seized (“repossessed”) to pay off a debt (this could be either hire-purchase goods or goods that you’ve put up as security for the loan).
- When you can‘t pay your debts: Bankruptcy and other options – As well as bankruptcy, this section explains two alternative processes: the no asset procedure and summary instalment orders.
Note: The key consumer credit legislation, the Credit Contracts and Consumer Finance Act 2003 (CCCF Act), was amended from June 2015 to provide greater protection for consumers. Those changes have been incorporated into this chapter. The changes include new “lender responsibility principles” that lenders must comply with. For example, a lender must be satisfied that the borrower can repay the money without substantial hardship, and they must help the borrower make an informed decision about whether to enter into the contract. The maximum penalties for lenders who breach the rules in the Act have also been significantly increased. Other changes include an increase in the “cooling off” period (the time after signing a contract when you can change your mind and cancel), from three to five working days. The Act that used to deal with repossession processes, the Credit (Repossession) Act 1997, has also been repealed, and its provisions have been moved, with some changes, into the CCCF Act.