August 26, 2021

At the current time, with unending lockdowns and conditional lockdowns, many consumers are facing financial distress. With these financial hardships, one of the major concerns of many is their existing debts such as home loans, car loans and other commitments with financial institutions. Such debts can become unmanageable if the necessary steps are not taken to meet repayment obligations. The Council understands that the lives of those trapped in unmanageable debt are swamped with stress and coupled with emotional distress. Often, the toughest step towards financial freedom is to muster the courage to ask for help. Everyone faces financial challenges at some point in their lives and many are uncomfortable talking about their debts. The Consumer Council of Fiji stands ready to assist anyone who seeks assistance through its Debt Management and Credit Advisory arm and assures consumers all cases will be dealt with utmost confidentiality.

Additionally, consumers in a bind may be relieved to note however, that certain consumer protection laws do give them an opportunity to find their footing before repayments are required to continue through debt restructure.

What is a debt restructure and how can it benefit consumers during COVID?

Debt restructure involves liaising with lenders to extend the dates when liabilities are due to be paid. These steps help a consumer’s chances of paying back its obligations as they seek alternative routes to meet repayments.

Credit counselling options are also available to consumers. While some may decide to have a debt restructure, the Council often advises the option of debt management that will help consumers reassess their finances and determine how much they can continue to pay and liaise with the creditor accordingly. This often involves working with consumers to create a suitable and viable budget that will help ensure they meet everyday living expenses while also meet debt obligations.

Changes to your loan/hire purchase contract in times of hardship

Changes to consumer credit contracts are possible on the basis that consumers are genuinely facing hardships. Section 66 of the Consumer Credit Act outlines these conditions.

66 (1) A debtor who-

(a) Is unable because of illness, unemployment or other reasonable cause, to meet  the debtor’s obligations under the credit contract; and

(b) Reasonably expects to be able to discharge the debtor’s obligations if the terms  of the contract were changed in a manner set out in subsection (2),

May apply to the credit provide for such a change.

Once a credit institution finds applications to be of a genuine nature, the assistance they provide will be subjected to the following:

(2) An application by a debtor under subsection (1) must seek to change the terms of the contract in one of the following ways without a change being made to the annual percentage rate or rates –

(a) extending the period of the contract and reducing the amount of each payment  due under the contract accordingly;

(b) postponing for a specified period the date on which any payment is due under  the contract;

(c) extending the period of the contract and postponing for a specified period the  date on which any payment is due under the contract.

How can consumers request for debt restructure?

Consumers who are in genuine need of a debt restructure can formally write to their respective financial institutions requesting for a restructure. Together with their application, consumers should provide evidence that their source of income has been compromised as a result of the pandemic.

Important tips when applying for a debt restructure

1. Submitting an application to the financial institution for a debt restructure does not automatically guarantee a restructure as it is at the discretion of the financial institution on a case by cases basis. .

2. Consumers should only apply for a debt restructure if they are facing extreme financial hardships and genuinely need it. If you have the capacity and ability to meet your debt obligations – please do so.

3. In instances where financial institutions agree to provide a debt restructure, consumers have the responsibility to honour that agreement. The Council has come across cases whereby consumers who were provided with a debt restructure failed to honour the agreed conditions.

4. The Consumer Credit Act does not relieve the consumer from his/her debt in an event they are not able to make their repayments but only gives provision to clear debt within a reasonable timeframe so that consumers do not lose their assets such as home or car.

5. While doing a restructure, the financial institution may charge reasonable finance fees or penalty interest for changes and your interest may continue to accrue.

6. Have a back-up plan – expecting the unexpected always goes a long way when it comes to your finances. Have a contingency plan such as an emergency savings fund, that could help you avoid missing repayments or accumulating more debt.

7. Know you can reach out – If you need help managing financially, call the Council on toll free number 155 or email us at complaints@consumersfiji.org. Alternatively, consumers seeking assistance can lodge a complaint via the Consumer Council of Fiji Mobile App. While the Council may not be able to meet with consumers face to face, these platforms ensure that consumers can effectively raise their issues without having their safety compromised.

The Consumer Council of Fiji commends financial institutions which are already working with their customers to carryout restructuring of their accounts. This is a praise worthy move and the Council calls on all financial institutions to assist their customers who are in genuine need of some form of financial relief through debt restructuring. The consumers and business community must work together during these trying times to ensure Fijians do not lose their properties and their lifes’ investments.