Contact us

0800 347 257

Debt forgiven on compassionate grounds

Huan’s partner said he wanted to buy her a car, but he had a bad credit history so she would need to apply for the loan.

Huan completed the loan application and gave the lender her bank statements. The bank statements showed Huan’s regular benefit income but did not show any of the usual living costs. Instead Huan appeared to spend all her money on discretionary items. When the lender’s agent, the car dealer, asked Huan why she did not appear to be paying rent, power, or any of the usual day to day living costs Huan explained that she was living with her parents, so did not have any of these costs. The car dealer made a note of his conversation with Huan and gave it to the lender.

The lender included notional amounts for Huan’s living costs and calculated that Huan could easily afford to repay the loan. The loan was approved and Huan made all the loan repayments for six months without any difficulty.

Suddenly, the payments stopped. The lender contacted Huan and asked what had happened. Huan explained that she had recently fled an abusive relationship and could no longer afford to repay the loan. Huan said that she had not been able to take the car with her, so had transferred the ownership into her partner’s name because she was worried that he might incur traffic fines that she would be responsible for. To complicate matters further, Huan was now pregnant and in hiding, fearful that her former partner might find her.

The lender said not to worry, they would repossess and sell the car reducing Huan’s debt. The lender stopped charging interest and fees and said they would be in touch to discuss a repayment plan.

Unfortunately, the lender was unable to locate the car and came back to Huan saying that she would be liable for the full amount of the debt: $12,000.

Huan was distraught. She had no ability to repay the debt and asked her mother for help. Huan’s mother complained to FSCL saying she could not understand how the loan could have been affordable in the first place.


The lender explained that, on the information available to them when Huan applied for the loan, the loan was affordable and that they could not have known about her personal circumstances. The lender was satisfied that they had met their responsible lending obligations and offered Huan a repayment plan.

Huan’s mother said her daughter had no income available to repay the lender. Huan had been left with considerable debt and was focused on rebuilding her life. Huan’s mother said there must be something the lender could do to help her daughter.


We reviewed the loan application and were satisfied the lender had met their responsible lending obligations. The lender could not have known that Huan was being manipulated by her abusive partner to borrow money. While Huan was living with her partner the loan was easily affordable. The difficulty came when Huan was finally able to leave the abusive relationship. But, by leaving the car behind, Huan was left with the debt and no asset to show for it.

We asked the lender whether they would release Huan from her obligation on compassionate grounds. After a financial mentor put together Huan’s statement of financial position showing she had no money available to repay the debt, the lender agreed not to pursue Huan for the debt. However, the lender intended repossessing the car from Huan’s former partner and asked for a statement from her explaining the circumstances of the debt and why she had relinquished the car.


Huan was very happy with the outcome, and provided the statement as requested by the lender. The complaint was settled.

Insights for consumers and participants

Although the lender had not done anything wrong, they could see that the right thing to do was to release Huan from the debt. We were pleased to see a lender taking a compassionate and pragmatic approach to this situation.