Breanna had a personal loan with the lender. Breanna was planning to take parental leave from late 2023 until early 2024. However, in early May 2023, Breanna’s midwife recommended that Breanna take parental leave as soon as possible.
As a result, Breanna had to begin her parental leave on 12 May 2023. This meant that Breanna’s parental leave would end on 12 November 2023, and Breanna would not have any income until she planned to return to work in May 2024.
Breanna and her partner had been living with family. However, in early October 2023, Breanna and her partner had to move out unexpectedly. The move caused Breanna’s living expenses to increase unexpectedly.
Due to Breanna taking parental leave earlier than expected, and her and her partner’s sudden move, Breanna was concerned that she would not be able to make her loan repayments once her parental leave ended.
Breanna contacted the lender to ask for financial hardship assistance. Breanna wanted the lender to defer her loan repayments from the end of her parental leave in late November 2023, until she returned to work in late May 2024.
The lender declined Breanna’s application for financial hardship. The lender explained to Breanna that they did not consider her pregnancy and resulting parental leave to be an unforeseen event, and that they could not grant financial hardship assistance in the circumstances.
Breanna complained to FSCL in November 2023.
Dispute
The lender said that Breanna did not qualify for financial hardship assistance because her situation was foreseeable.
Breanna said that, although her pregnancy was foreseeable, her early parental leave and moving out of her accommodation were unforeseeable. Breanna wanted the lender to reconsider her application for financial hardship.
Review
We looked at the emails between Breanna and the lender, and the documents the lender reviewed when they assessed Breanna’s financial hardship application.
Breanna sent us additional documents that supported her unexpected change in living circumstances, and the change in her parental leave dates. It did not appear that Breanna had sent the lender these documents.
Resolution
We spoke with the lender and suggested that they reconsider Breanna’s financial hardship application. We explained to the lender that Breanna’s circumstances had changed unexpectedly, and that Breanna may not have passed on all the necessary information when she submitted her application.
We also told the lender that Breanna would be returning to work in the next three months and would be able to resume repayments once she had resumed earning income.
The lender agreed to defer Breanna’s repayments for three months until she returned to work and extend the term of Breanna’s loan to ensure her repayments remained affordable.
We explained to Breanna that accepting the lender’s offer would give her hardship relief but would also result in her paying more interest over the term of her loan because she was deferring some loan payments.
Breanna accepted the lender’s offer.
Insights for consumers
When applying for financial hardship, it is crucial to pass on any information that relates to an unexpected change in your financial circumstances.
If a lender agrees to defer repayments, the term of your loan will be extended and you will have to pay more interest over the term of your loan.
