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Debt Collection News


Released every month our debt collection blog contains news, stories and tips to keep you informed.

Does Hardship apply to an Investment Property

Monday, November 01, 2010 - Posted by Philip Harvey

You have a loan where the debtor has borrowed to buy a house as an investment & that loan is now in arrears. The debtor has been sent default notices & has now submitted a Hardship Application. Does hardship actually apply?

The National Credit Code (NCC) was extended to cover loans given to purchase / renovate / improve a residential property for investment purposes. Section 72 of the NCC allows a borrower to request a change to the terms of their credit contract on the grounds of financial hardship. As the NCC applied to residential property brought for investment purposes, Hardship does apply.

The finer print:

  • Credit for residential investment purposes was not regulated by the UCCC. The new NCC commenced on 1 July 2010. An existing  loan for investment purposes that was written prior to 1 July 2010 is not regulated by the NCC.
  • External Dispute Resolution (EDR). We note the above point about contracts prior to 1 July 2010, your EDR scheme may still get involved & force a binding decision on you contrary to the above.

An aside note about Tenants & Hardship:

Tenants can now apply for hardship and be given a 'payment holiday' and not have to pay there rent for a period, with increased once payments resume to catch up. Whilst this is nothing to do with the lender, there is a natural flow on effect. This may see owners of investment properties struggle with payments whilst the payment holiday occurs. You may find the investor applying for hardship with there lender in these circumstances.

Debt Collection & Centrelink Recipients

Monday, November 01, 2010 - Posted by Philip Harvey

The quick answer is not without the debtors consent.

The law states 

Social Security Administration Act 1991 (Cth)

Section 60(1) of the Social Security Administration Act 1991 (Cth) (“the Commonwealth Act”) provides that:


“A social security payment is absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise.”


Section 60(2) of the Commonwealth Act provides for a number of exceptions which apply to the collection of certain Commonwealth debts and therefore are not relevant to any consideration of a debt owing to an Financial Services Provider by a Centrelink recipient.


Legal action against a centrelink recipient ?


Legal action is certainly possible against a debtor receiving Centrelink and Judgment will be entered against them.

However action to recover is limited. As the debtor is not employed a garnishee against wages is not an option.

A bank garnishee is possible however only funds in excess of the Centrelink payment that are held in the account for a period are  claimable .  As most Centrelink receivers do not hold large balances in their accounts this is generally not successful.

A writ to take goods and property can be successful if debtor has goods of value to take.


Slower Actions on Writs

Friday, October 01, 2010 - Posted by Philip Harvey

Currently the Public Service Association (PSA) have work bans in place re the actioning of writs by Sheriffs.This means that letters are sent but visits not being made to seize goods.


This affects only NSW. Not all sheriffs are adhering to these bans.

The purpose of these bans is to achieve better pay and personal security for NSW Sheriffs.

In addition the PSA believes that policies introduced by the current government have adversely affected the provision of services.

Currently in NSW only one visit to a defendant is covered on the cost of a writ and other visits are charged per visit.

The PSA  believes the fee for a writ should be slightly increased but should cover a letter and then 3 visits by the sheriff.

This would be of great benefit to LCollect and its clients.

This should be resolved shortly .


Justicelink eServices only method available for bulk lodgement

Wednesday, September 01, 2010 - Posted by Philip Harvey

The Local Court (NSW) has advised that from Monday 11th of October the old method of bulk filing court documents will no longer be accepted, with all users of the local court required to use JusticeLinks eServices for bulk lodgment.


The court has strongly recommended all users of the local court start using the new eServices.

LCollect has been using eServices successfully for a number of months with our clients benefiting from much faster processing / turn around time.

If your supplier does not use eServices, contact us today.

Who is Becoming Bankrupt

Wednesday, September 01, 2010 - Posted by Philip Harvey

Statistics for this were obtained from the ITSA website. 

What are your experiences on your ledger concerning age and occupation of  bankruptcy ? 

Your comments in the new forum below will be greatly appreciated. 

1/ Bankruptcy by Age 

Debt Agreement Bankruptcy 

Age Group      

     Debt agreement 
(part 9)

  bankruptcy 

 Under 25

 12.8%    

 5.9%

 25 to 34

 37.3%

 18.7%

 35 to 44

27.5% 

 27.3%

 45 to 54

 16.9%

 24.9%

 over 55

 5.5%

 23.2%


2/ Causes of Bankruptcy 

 Overuse of credit

25.25% 

 Unemployment

 32.7%

 Domestic Discord

 11.49%

 Ill Health

 10.9%

 Adverse Litigation

 3.93%

 Gambling or speculation

 6.45%

 other

 9.28%



3/ Occupation of people filing for Part 9 agreements. 

Management 

5.5% 

 Professionals

 10.8%

 Assoc Professionals

 10.00%

 Tradesperson

 9.6%

 Clerical/service

 41.00%

 Transport

 4.8%

 Laborers

 10.1%

 Other (unemployed,spouses)

 8.2%


A couple of brief observations :
1/ The difference in the type of bankruptcy used by age.
2/ Unemployment is not the biggest cause of bankruptcy.

National Credit Code Exemption for Contingent collectors

Sunday, August 01, 2010 - Posted by Philip Harvey

Updated amended regulations released by Australian Treasury in July means that contingency  (commission) based collectors do not require a license. Previously the industry had a 12 month exemption.

The Explanatory Memorandum advised;

Items 6 and 7 omits subregulations 20(9) and 21(4) of the Principal Credit Regulations so that the exemption from licensing for state licensed debt collectors will not expire after 12 months, as the states have not yet reached agreement on the regulation of debt collectors.

Full details can be viewed within the Amending Regulations.




2009-2010 Bankruptcy Statistics

Sunday, August 01, 2010 - Posted by Philip Harvey

ITSA have released the latest bankruptcy statistics on Part IX & Part X Debt Agreements.


They show the following;
       2008 / 2009          2009 / 2010          % Change    
 Total Personal Insolvency Activity         36,487         36,506  increase of 0.05%
 Bankruptcies        27,483         27,507  increase of 0.09%
 Part IX Debt Agreements          8,567           8,428  decrease of 1.62%
 Part X Arrangements             437              571  increase of 30.66%

Overall, activity has been fairly consistent from the previous year. 2008 / 2009 saw interest rates drop and in theory decreased pressures. 2009 / 2010 saw increased pressures, with the bankruptcies remaining consistent.

Source: ITSA

JusticeLink eServices - Electronic Lodgement

Thursday, July 01, 2010 - Posted by Philip Harvey

**** Significant delays expected for providers who do not use efiling ****

With the NSW Court system JusticeLink eServices successfully working, JusticeLink have advised that the old Bulk Filing System will be shut down on the 28th of June 2010. 

This will present a number of different scenarios & implications for each scenario for everyone who takes legal action in NSW to recover monies owed including; 
- People who use a provider like LCollect that is using eServices to lodge SLC's, Judgments & Writs 
- People who do not use a provider that is using eServices to lodge SLC's, Judgments & Writs 
- Post Judgment Enforcement Action (other than Writ that is not yet available on eServices).
- Legacy matters where action was not initiated on the new JusticeLink eServices system.

LCollect can lodge all documents through JusticeLink on your behalf. To gain all the benefits of JusticeLinks new eServices, contact us now. To find out more about the benefits & avoid the negative scenarios outlined below, read here.

1. People who use a provider like LCollect that is using eServices to lodge SLC's, Judgments & Writs;

This is the best possible position to be in. Your SLC's, Judgments and Writs can be processed very quickly, not having to wait for the Local Court to process them. This puts you in full control of your matter. An example of this is our turnaround time is now averaging 24 hours from receipt of instruction. In some instances it has taken is 2 hours from receipt of instruction to having a PDF Copy of the SLC. 

The new JusticeLink eServices system has proven to be an excellent system that has significantly improved the way providers liaise with the court.

2. People who do not use a provider that is using eServices to lodge SLC's, Judgments & Writs - SIGNIFICANT DELAYS EXPECTED;

This will present a number of problems and requires further background explanation.
JusticeLink have advised;
"While JusticeLink is performing well, a significant number of high volume users are not yet ready to electronically file. Therefore, we will be providing extra time to enable us to test an alternate strategy to provide a capability to lodge Statements of Claim (No Listing) for bulk filers into the legacy system beyond the JusticeLink Go Live, as a short term solution (we have been advised to the 28th of June).  The legacy system needs to be de-commissioned and all matters transitioned to JusticeLink to gain full advantage of the new system."

Liaising with our own Local Court - North Sydney - we have been advised that we are the only user of this court that is using the JusticeLink eservices. Given the statement made from JusticeLink, we expect this to be the scenario across many courts.

What are the implications of this when the old bulk filing method is switched off for users who cannot lodge electronically?

The high volume users not taking up the system (due to a number of factors including not wanting to spend the time or money involved in development, need more time to test etc) will have to lodge there documents manually in person in the Local Court. We have been advised that Local Courts will only be accepting 5 documents a day per user, and users seeking to lodge more than 5 will have to leave these documents for later processing.

We anticipate that the Locals Courts will be inundated with manual paper work that will create significant delays as they lose the benefits of the old legacy system for high volume users (who have not taken on the new system). This may cause significant delays in processing of manual documents.

Therefore, if you are in this scenario & your provider has not upgraded to the new electronic lodgement eServices system, we would urge you to find one that does. Please contact us to avoid this scenario. 

If you do not want to change providers but want the benefit of electronic lodgement, we can assist your current provider - have them contact us now.


3. Post Judgment Enforcement Action other than Writ that is not yet available on eServices

These will continue to be lodged manually until JusticeLink release upgrades - we expect that Garnishee orders will be available later this year.

The wider implications of what will happen to these manually lodged documents is unknown. Given consideration to the above raised issue of the courts being inundated with paper from high volume users, we are expecting that processing times will increase Dramatically for all our Post Judgment Enforcement actions (excluding Writs). 

This is something that is out of our control, and we will be working closely with our Local Court to manage this situation.


4. Legacy matters that were not commenced in the new JusticeLink system

JusticeLink have advised us that it is not recommended to use eServices to electronically lodge documents on legacy matters that have been transferred from there old database. As there system develops and improves, this may change in the future, however it is unlikely to change in the near term. Therefore old legacy matters where action was commenced before May/June 2010, any further action will have to be taken using manual lodgement until otherwise recommended by JusticeLink.



If you have any questions or concerns, please contact us. We will provide further updates on processing times as this unfolds.


Photocopiers and Privacy

Thursday, July 01, 2010 - Posted by Philip Harvey

Have you ever thought about how your organisation disposes of its Photocopiers?

Nearly all photocopiers contain a Hard Drive, with most digital copiers storing an image of every scan, image & print job. The below case study is a good reminder of ways data that would be covered by the Privacy Act may be unwittingly disclosed:


In February 2010, news service CBS accompanied John Juntunen, the founder of DCSI (Digital Copier Security Inc) to a warehouse in New Jersey to discover how hard it would be to buy a used copier loaded with documents and discovered that it was pretty easy! Based on price (less than US $300 each) and the number of pages printed, Juntunen selected 4 machines. The original owner and use of those copiers were not known until after the copiers had been unpacked and plugged in. 

CBS reported that within half an hour, Juntunen had removed the hard drives from the 4 copiers and then used a forensic software program available for free on the Internet to run a scan which allowed him to download thousands of documents in less than 12 hours. 

On one of the copiers, they found documents still on the copier glass, from the Buffalo, N.Y. Police Sex Crimes Division. Getting into the data from that copier, they found detailed domestic violence complaints and a list of wanted sex offenders. 

On a machine from the Buffalo Police Narcotics Unit they found a list of targets in a major drug raid. 

The third machine had previously been used by a New York construction company and yielded design plans for a building near Ground Zero in Manhattan, 95 pages of payslips detailing names, addresses and social security numbers and $40,000 in copied cheques. 

The final copier purchased, originated from Affinity Health Plan, a New York insurance company – this copier gave up 300 pages of individual medical records, everything from drug prescriptions, to blood test results, to a cancer diagnosis.

Bankruptcy Threshold to be Increased

Thursday, July 01, 2010 - Posted by Philip Harvey

The Bankruptcy Amendment Bill has increased the threshold of Bankruptcy to $5,000, up from $2,000. We note that is this different to the original $10,000 threshold that was proposed & welcomed.

All of the proposals in increases in the income, asset and debt thresholds for voluntary debt agreements have been deferred which is disappointing given the number of Part IX Debt Agreements our clients are experience on small debts (with Part IX Debt Agreement providers like Fox Symes heavily advertising this service).

Other changes include:

  • Increasing the stay period before a creditor can commence action to recover debts from seven to 21 days
  • Strengthening the penalties for those involving fraud


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