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Time to take action

The story

In May 2008, Wendy and Nick entered into a loan agreement with Buy Me Loans Limited (BML) for $221,255. The loan was secured by a mortgage over their home. In November 2009 arrears began to accumulate on the loan because Nick had become unwell, and was unable to work.

BML issued a Property Law Act notice in October 2010 under section 119 of the Property Law Act, requiring Wendy and Nick to pay $1879.67 by the end of November 2010. The notice warned that if the $1879.67 was not received, BML would be able to sell their house.

Wendy and Nick were unable to pay the $1879.67. They listed their house for sale at $380,000 in November 2010. In January 2011 Wendy and Nick reduced their asking price to $350,000.

In April 2011 BML decided it would not wait any longer for Wendy and Nick to sell their own house, and appointed a real estate agent. In May 2011 the house went to auction, but was passed in at $232,000. In July 2011 a licenced valuer gave the house a market value of $270,000, and a forced sale valuation of $235,000.

The property sold for $252,000 in July 2011. The sale price did not cover the amount Wendy and Nick owed to BML, leaving a residual debt of $26,506. Wendy and Nick were unable to commit to a repayment agreement with BML.  BML referred the debt to the Credit Collection Agency (CCA).

CCA was unable to recover the debt because it did not have accurate contact information.



In January 2015 Wendy called CCA after a credit check revealed the BML debt. Wendy confirmed she was working, however Nick was not. CCA noted that Wendy refused to pay the debt, and resumed recovery action.

In July 2015 Wendy wrote to FSCL complaining about the way BML sold her home. Wendy wanted BML to write off the residual debt owing. However, BML considered Wendy and Nick liable to pay the residual debt owing on the loan.


Wendy and Nick’s position

Wendy and Nick accepted the property needed to be sold, but say they were marketing it through a real estate agent and BML should have waited for them to sell it. Instead, BML intervened and sold the property for less than it was worth at a mortgagee sale.

During this time Nick was very unwell and was admitted into the hospital with a heart condition. Wendy says BML’s actions affected Nick’s health and caused them both a considerable amount of stress.

Wendy and Nick believed BML should write off the outstanding debt and clear their credit rating.

BML’s position

BML believed it took reasonable care to sell the house for the best price reasonably obtainable at the time of sale. BML did not accept it rushed the sale, saying the house was on the market for three months with a reputable real estate agent.

BML referred to the loan agreement, signed by Wendy and Nick, which said they were liable to pay all costs associated with the mortgagee sale.

BML believed the debt is legitimately owed and was not prepared to write off any of the debt or change Wendy and Nick’s credit rating.



When assessing the merits of a case we must give fair regard to the law and industry practice. BML followed a reasonable process to recover a legitimately owed debt. Wendy and Nick were in default of their obligations to BML when they were unable to repay their loan.

As a mortgagee BML was obliged to follow a reasonable sales process and appoint a reputable real estate agent to advertise and market the property. We considered BML had satisfied this obligation and obtained a price above the valuer’s forced sale estimate. Also, BML had allowed Wendy and Nick three months before this to sell the property themselves.

Wendy and Nick also complained BML’s actions made an already stressful situation worse. We understood Nick was having health problems at the time, and had no doubt BML’s decision to issue the Property Law Notice increased stress levels. However, we did not see how BML could have acted differently. The mortgagee sale and its associated stress were inevitable.  



We found BML was entitled to recover the outstanding debt owed by Wendy and Nick. We encouraged Wendy and Nick to review their position, and enter into dialogue with BML’s collection agent to repay the debt. Unfortunately, Wendy and Nick did not accept our recommendation and we closed our file.



It is important to discuss financial problems early with your loan provider. When debts have to be referred to a collection agency the costs are passed on to you, which exasperates the problem.