• Michael McCulloch

What must I do before recording a consumer payment default?


Recording a payment default? Here is what you need to know.

You may recall from our archives that we covered the recording of payment defaults with a Credit Reporting Body (CRB) several times over the years.


While the process has remained unchanged for several years, it is always worth a refresher for those new to the industry or those who have had limited exposure to this process. In this article we will only cover debts that are regulated by the National Consumer Credit Protection Act.

SECTION 88 DEFAULT NOTICE & FORM 12A

The Section 88 Default Notice provides the consumer notification that their account is in arrears, the amount in arrears and the time in which they have to correct the default while the Form 12A, which is attached to the Default Notice, provides the consumer with information about their rights including information about financial hardship and the dispute resolution options available


When It Must Be Given

This must be given 30 days prior to commencing enforcement action including recording a payment default with a CRB. The CR Code recommends that 10 days be added to this date for postage.


Can It Be Combined?

The Section 88 Default Notice can be combined with a Section 6Q Notice however it cannot be combined with a Section 21D Notice.

SECTION 6Q (PRIVACY ACT)

The Section 6Q Notice informs the customer of the overdue payment amount and requests payment of that amount. This Notice indicates to the customer that the amount can be reported to a CRB once that amount is 60 days overdue.


When It Must Be Given

The Section 6Q Notice must be given prior to disclosing default information to a CRB.


Can It Be Combined?

The Section 6Q Notice can be combined with a Section 88 Default Notice however it cannot be combined with a Section 21D Notice.

SECTION 21D NOTICE (PRIVACY ACT)

The Section 21D Notice advises the customer that the credit providers intends to disclose default information to a CRB.


When It Must Be Given The Section 21D Notice must be given at least 14 days prior to disclosing information to a CRB and not more than 3 months prior to disclosure.


Can It Be Combined?

The Section 21D Notice cannot be combined with the Section 88 Default Notice or Section 6Q Notice.

OTHER CONSIDERATIONS

  • If a Section 6Q Notice is combined with the s88 Default Notice once the Section 21D Notice has expired only the arrears can be listed with a CRB.

  • If a creditor provider intends to list the full outstanding debt with a CRB a separate Section 6Q Notice must be issued and allow 30 days for this Notice to expire.

  • To issue a Section 6Q Notice the amount in arrears under the Credit Contract must be in excess of $150.

  • Before a default can be listed with a CRB the default amount must have been outstanding for more than 60 days.

  • The payment default must be reported to the CRB within 90 days after issue of the Section 21D Notice.

  • A payment default cannot be reported with a CRB where the customer is claiming financial hardship.

  • A payment default cannot reported with a CRB where the matter is before an External Dispute Resolution (EDR) board nor 14 days after the dispute is determined.

Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.

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