VIC Pioneer Credit stopped direct debt for 2 years without consent and now want more. Is that legal?

[Hayley_Met]

my husband had direct debts stop for 2 years by pioneer credit on a 13k loan of which he was paying.
They now say that for 2 years they gave a ‘grace’ period and even though he had paid $8300 it is now stating we owe $13195.91!!!
Is this legal? What can we do?
They offered us a 50% discount if we paid in 7 days.
It takes 21-45 days for an investigation in why for 2 years they chose to stop payments. They say they tried to contact him through many ways and never heard from him so they were ‘helping’ by stopping all payments. Last payment was feb 2012 then a few payments didn’t go through so they stopped to help him and now at 26 months later they have suddenly taken $100.
Where do we stand and what can we do?? This is insane.
The loan was before we were together and he isn’t the greatest with money but can they do that for 2 years and the interest rates changes so that’s why it’s sooo much apparently.

 

[Rob Legat - SBPL]

Their reasoning is artificial, but the core of it is - if your husband owes the loan, he owes the loan. There may be some credence to arguing that the direct debit should not have stopped, but the circumstances may erode that:

- For a start, he has a positive obligation to pay the loan. He could argue that he thought it was being paid if debits stopped without his knowledge, but the longer this goes on the harder it is to make out. He could reasonably be expected to realise over time the debits were not coming out. A direct debit is technically his arrangement, it can only be done on the basis of an instruction he has given by way of a direct debit authority;
- There may be a valid reason the debits ceased. It could be there's a technical error on the document, the bank refused to process a draw, it was dishonoured several times...
- The debit authority could also have been cancelled, although that appears unlikely from what you've said.

Reading into the situation (educated guess, I suppose) I'd consider the 50% discount to mean "we know there's a potential issue for us here, so here's an attractive offer just to make it go away". The time frame is very short however. Assuming it's achievable, or you can push it out be negotiation, consider this:

The loan was for $13,000.
He has paid $8,300 - so it was going for a while
They claim $13,000 is owed. That would appear to indicate a high interest rate, but that's a guess off the information available.
If he paid it all out today without discount, that's over $21,000 paid on a $13,000 loan.
If you took the discount, that's about $15,000 on a $13,000 loan.

Considering he has had it for (well) over two years, and it apparently had a high interest rate to begin with, $2,000 interest on a $13,000 loan isn't a bad outcome. In simple terms, it's very roughly in the vicinity of 10% per annum. A variable rate personal loan is running about 13-14% per annum at the moment.

All that in consideration, if there is something untoward about what has happened then there is a possibility you can get all the interest and charges wiped (including reimbursement). That's pretty much the best outcome you can hope for though, as it takes serious misconduct for a court to disallow the lender to regain their principal.

 

[settle]

Please refer to section 188 subsection 1,2,3 to the schedule of the NCCP law

Interesting ready

Don’t pay them a cent

We can help u

Not even the true professionals fight for u, and know this LAW, it’s sad...

WE DO AND GUARANTEE U RESULTS

 

[Rob Legat - SBPL]

Please refer to section 188 subsection 1,2,3 to the schedule of the NCCP law

Interesting ready

Don’t pay them a cent

We can help u

Not even the true professionals fight for u, and know this LAW, it’s sad...

WE DO AND GUARANTEE U RESULTS

This sort of post is extremely dangerous and here's why:

1. Section 188 of the National Credit Code (which is Schedule 1 to the National Consumer Credit Protection Act, deals with some practical application of an assignment of debt to another credit provider. It has nothing to do with the situation put by Hayley_Met. There is no indication in her post that the loan was assigned.

2. It's a common concept to disparage the "true professional" (their words, not mine), simply because they're saying something that apparently people don't want to hear. While I can only speak for myself, you don't go to a lawyer for them to tell you what you want to hear - you go to a lawyer because you want to know what to know what your legal rights and obligations are. Sometimes that means hearing things you don't want to hear.

3. "Don't pay them a cent" - this is perhaps the most dangerous part. If you don't pay a debt you are legally obligated to pay, there can't be serious ramifications. You could be the subject of court or tribunal proceedings. An adverse finding against you, if registered as a judgment, may be entered on your credit files where it will stay for five years (and I do mean credit files). If the debt is to a credit provider who uses the services of a credit reporting bureau, you may wind up with a default listing (which also lasts for five years). If it becomes a serious credit infringement, requiring a period of non-contact for at least six months amongst other things, the listing is increased to seven years. With a current judgment listing, default listing, and especially a serious credit infringement, you chances of obtaining further credit will decrease significantly. In some cases, to almost zero. Perhaps the only thing that could be worse is to be currently bankrupt.

4. "WE DO AND GUARANTEE U RESULTS" - It's assumed these results are positive - everything has a result. The ACCC can tell you a bunch of reasons why you can't do this. The simple thing is, the outcome is not within their control. Anyone who is willing to guarantee an outcome which is beyond their control should not be relied upon. Of course, if it's a case of "we guarantee you a particular result or we'll refund your money" then that's a different proposition.

 

[Rod]

re: Guarantee. If you need to rely on the guarantee chances are your credit rating would be trashed and then you'd need some good luck getting money out of them.

Maybe ask them to put guarantee money into an escrow account at your solicitors and see what they say If they are serious they will not have an issue with this.

 

[settle]

I suggest all look at section 89 sub 2 re credit rating and hardship

We challenge all FSP on section 188

GENTS WATCH THIS SPACE AND U WILL SEE A CLASS ACTION RE CREDIT CORP

The way u prove to all the so called professionals is push the system

Go pay $5 into the original bank the system takes it, then read section 188 sub 3 no LAWYER in Australia can answer it

This is why we challenge it

I WISH THE PROFESSIONALS WOULD REALLY HELP THE AVERAGE JO BLOW RATHER THEN WORRYING ABOUT CHARGING $500 AN HR

 

[settle]

And we don’t have a problem putting money in escrow to prove to the system we are better than the professionals

 

[Rod]

though nothing to do with proving you are better, goes more to proving your intentions are sound. Hope the OP takes up your offer to put $13,000 in escrow.

I like to see consumers helped if credit providers are taking advantage of them. I support the principle, while also acknowledging the person lending money is entitled to the return of their money + some interest.

 

[settle]

Hope so to

Will keep u posted

 

[Rob Legat - SBPL]

I’ll take your ‘no lawyer in Australia can answer it’ challenge.

I will disclose that I’m no fan of Credit Corp or their practises, I have 20 years’ experience in the credit industry, hold a Diploma of Credit Management in addition to my law degree, was the president of the Queensland industry body for small amount credit providers, was then the vice-president of the national industry body, and have taken part in multiple policy focus groups and committees for credit law reform. Consumer credit law is the area in which I am currently most knowledgeable.

Re subsection 89(2) – I’m going to assume you actually mean ss89A(2). Giving a hardship notice is a commonly known method of stymying enforcement action, but it’s limited in timeframe. It gives you at least a 14 day reprieve. If the borrower is truly in hardship, then they really should have said something before it got to that stage. If the borrower is not legitimately in hardship, they buy themselves a few weeks grace. It’s one of the range of things in the NCC that can (and are) used to block lenders.

Re section 188 – Again, that only affects loans which have been assigned. It’s also poorly worded and uncertain – like a lot of the Code provisions. I don’t know off the top of my head whether the section has ever been raised in court, but the relevant issues are likely to be:

- Does subsection 3’s negativing affect the application of the Code to the assignee only, the assignor only, or both? A casual reading would indicate both, but on a practical legal reading I would say that it would only operate to continue to impose obligations on the assignor (second option). My reason for this is: In practical terms Credit Provider A sells a loan to Credit Provider B regarding Consumer C. B may have paid consideration to A for the debt. If C makes a payment to A (which A accepts), then B loses all of its rights under the Code through no fault of its own. I can’t see any reason why a court would enforce that. But I could see them continuing to enforce compliance options against an assignor who continues to act as if they’re the credit provider.


- What does ‘receive payments’ mean? Again, on a bare reading the example used by settle would work. Put $5 into the original credit provider’s account and watch the fireworks. But this is clearly not what should have been intended in the legislation. I think a court would imply that receiving payments requires a conscious acceptance and retention of the payment by the original credit provider. If once they became aware of it, for example, they remitted it on to the new credit provider within a reasonable time then I would contend they have not received it themselves but perhaps as agent for the assignee credit provider. I think you’d probably find, as well, that any assignment agreement between the credit providers would cover this sort of eventuality (or should, if done correctly).

Regardless, the operation of the section does nothing to decrease the liability of the debtor to the payment of the debt.