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Credit and Investment Ombudsmans Approach to Default Listings and Mortgages

Thursday, December 10, 2015 - Posted by Philip Harvey

The CIO's December 2015 Newsletter gave an interesting piece on mortgage defaults and credit listings. Below is the full article

 

Can a consumer's default be listed on a credit report if the credit provider has also obtained Judgment?

A credit provider may list default information related to consumer credit contracts on an individual’s credit report if the requirements under the Privacy Act have been met.  If the credit provider has obtained Judgment in relation to a credit contract, credit reporting bodies may obtain the Judgment information from the courts and also include this information in the individual’s credit report.

If the default was listed before the credit provider obtained Judgment, does it need to be removed once the Judgment is listed?

No. The default information is information about the credit contract whereas the related Judgment information is about the court proceedings. These are two separate pieces of information and both can be appear on an individual’s credit report.

If the default was not listed before the credit provider obtained a Judgment for a monetary sum, can the credit provider list the default after Judgment?

No. Under the Privacy Act, default information must relate to consumer credit that has been provided by a credit provider to the individual (section 6Q(1) Privacy Act). Judgment for a monetary sum means the credit contract merges into the Judgment. As the resulting Judgment debt does not fall under the definition of consumer credit under the Privacy Act, a default cannot be listed for overdue payments.

What if the credit provider only obtained Judgment for possession?

Yes. Where the credit provider has obtained a Judgment for possession only and the Judgment is not also for a monetary sum, we consider that the credit contract continues to exist and has not merged with the Judgment for possession. As the credit contract continues to exist, a default can be listed on the consumer’s credit report, after Judgment for possession has been obtained.


Source: CIO News December 2015


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