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When hardship relief is not enough

In 2020 Andrea borrowed money from a lender to buy a car. In 2021 she met James and together they borrowed money from the same lender to buy a car for James. They made the loan repayments without any difficulty until Andrea lost her job in mid-2022. The lender suggested Andrea apply for hardship relief, but Andrea found the process too intrusive, so the application did not progress.

Andrea and James struggled financially for about a year until Andrea found a new job in August 2023. By now Andrea and James were behind on the payments for both loans. Andrea and James asked, and the lender agreed, to restructure the lending, combining both loans.

Andrea and James made two full repayments, and one partial payment, before the loan payments stopped completely in October 2023. In November 2023 Andrea and James’ relationship ended and Andrea asked for further hardship relief. The lender declined and said they wanted to repossess James’ car. Andrea agreed and James’ car was repossessed in December 2023 and sold in January 2024 leaving a residual debt of $6,500.

Andrea was not making any loan payments and the lender asked her to surrender her car as well. Andrea declined and complained to FSCL.


Andrea did not agree to surrender her car. Andrea felt the lender had treated her unfairly because she was experiencing financial hardship, and the lender should do something to help. Andrea said that James had told her he would make the loan repayments and she was unaware that the loan was in default until after they separated in November 2023.

The lender said there was nothing more they could do to help because they had restructured the debt once already and were not confident that Andrea could afford to repay the loan.


When Andrea and James signed the loan agreement, they agreed to repay the loan and that, if they did not, the lender could repossess and sell the cars that were securing the loan.

Although Andrea may have believed that James was making the loan payments before they separated, regardless of who was responsible for paying the loan, it was reasonable for the lender to expect the payments to be made in full and on time. Even after Andrea became aware that James was not repaying the loan, she did not make any payments.

While Andrea wanted to keep the car, she no longer qualified for a hardship application under the Credit Contracts and Consumer Finance Act 2003 because she had missed more than four consecutive payments. In the circumstances, the lender was entitled to decline to consider a further hardship application.

Although Andrea believed that the lender had treated her unfairly, the August 2023 restructure seemed to us to be a generous gesture to give Andrea and James a fresh start. Andrea had also not made any regular payments since September 2023 so by February 2024 her debt was increasing. We considered that the lender was entitled to repossess and sell Andrea’s car.


We suggested to Andrea that the best outcome would be for her to co-operate with the lender to sell the car for the best price they could get. We suggested it would then be reasonable to negotiate an affordable repayment plan. Andrea disagreed, and we made a final decision that Andrea should discontinue her complaint about the lender.

Insights for consumers

Sometimes circumstances change and what was affordable debt becomes unaffordable for the borrower. If the lender cannot offer any further hardship relief, the best option is to co-operate with the lender to sell the car for the best price you can get and then agree on an affordable repayment plan.