Lender clears domestic violence debt

A lender canceled a loan that a woman, who was being abused by her partner, could not afford. Huan, who was forced to borrow money, was forced into debt because her partner had a bad credit record.

“Although the lender did nothing wrong, they could see that the right thing to do was to free Huan from debt,” says Susan Taylor, CEO of Financial Services Complaints Limited (FSCL), “We were glad to see a lender taking a compassionate and pragmatic approach to this situation.

FSCL is a free service for consumers and can investigate complaints about a range of financial service providers.

Huan applied for a loan for a car, after her partner pressured her to do so. Her bank statements showed regular benefit income, but did not list any of the usual living expenses.

When the agent for the lender, the car dealership, asked Huan why she didn’t seem to be paying rent, electricity, or any of the usual living expenses, Huan explained that she lived with her parents and she therefore had none of these costs. costs.

With this information, the lender calculated that Huan could easily afford to repay the loan. The loan was approved and Huan made all loan repayments for six months without any difficulty.

When loan repayments suddenly stopped, Huan explained that she had recently fled an abusive relationship and could no longer afford to repay the loan.

Huan said she couldn’t take the car with her, so she transferred ownership to her partner’s name because she feared he would face traffic fines that she would be responsible. To further complicate matters, Huan was now pregnant and in hiding, fearing that her former partner would find her.

The lender planned to repossess and sell the car, but when they couldn’t locate the car, they told Huan she would be responsible for the full amount of the debt: $12,000.

Huan was distraught. She did not have the ability to repay the debt and asked her mother for help. Huan’s mother complained to the FSCL saying she could not understand how the loan could have been affordable in the first place.

FSCL was satisfied that the lender had fulfilled its responsible lending obligations. The moneylender could not know that Huan was being manipulated by her abusive partner into borrowing money. While Huan was living with her partner, the loan was easily affordable. The difficulty came when Huan was finally able to leave the abusive relationship.

“The lender explained that based on the information they had when Huan applied for the loan, the loan was affordable and they could not know his personal situation. The lender was confident they had met their responsible lending obligations and offered Huan a repayment plan,” says Taylor.

“Huan’s mother said her daughter had no disposable income to repay the lender. Huan had found herself in considerable debt and was focused on rebuilding her life.

FSCL asked the lender if it would release Huan from his obligation on humanitarian grounds. After a financial mentor established Huan’s financial statement showing that she had no money available to pay the debt, the lender agreed not to sue Huan for the debt.

You can read the full case note here.

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