This section deals with secured debts and mortgages arrears. Under the Code and the National Credit Act there are specific requirements in relation to default notices and repossession that you should be aware of when dealing with these issues. Also, keep in mind that people who have fallen into arrears with their mortgage will not always be part of Homeless Law’s client group and a well-supported referral may be necess
If the client cannot pay a secured debt (for example, a mortgage over a house or another loan secured by a person’s home or car), the creditor will be able to repossess the goods used as security and sell them.
Creditors will usually get court orders first if the security is over property.
If the client’s debt is not fully repaid after the asset is sold (for example, if they owed more on their home than it was sold for), the client will still owe money and the creditor may take the action set out in Judgment Debts to recover that money (i.e. secured creditors can still use remedies available to unsecured creditors, but only after the security has been sold and only for the amount still owing (if any) once the security has been sold).
Under section 91 of the Code, a creditor must not repossess goods without an order where less than 25 percent of the amount of credit or $10,000 (whichever is less) is owing (i.e. if the debtor has paid off over 75 percent of the amount owing or they owe less than $10,000, repossession cannot proceed without the court’s consent).
The recent economic downturn saw a rise in the number of clients approaching Homeless Law with mortgage arrears. These clients do not necessarily fall within our client group. In particular, it may be that the client has significant equity in their home and will not be at risk of homelessness in the event that the property is sold. We will sometimes be able to assist clients with mortgage arrears if they have overlapping vulnerabilities such as mental illness or substance abuse problems or it looks like they will be unable to obtain legal assistance elsewhere and may, therefore, be at risk of homelessness.
If a client presents with mortgage arrears, you should contact Homeless Law to discuss on a case-by-case basis whether we are in a position to assist. This section provides some information on the client’s rights for the purpose of providing initial advice.
If we are not able to assist the client directly, it will be important to arrange a well-supported referral, keeping in mind that these matters are often time critical.