Repayment problems

Problems managing your debts today can have a big impact on your financial future. Find out about your options and why it’s important to have a good credit history.

• What to do when the problem starts
• What to do if you’re in serious trouble
• Your credit history and how to check it

What to do when the problem starts

If you get in trouble with your debts there are two rules – one, try not to miss a repayment, and two, let your lender know as soon as possible. They may be able to work with you to sort out a repayment plan.

Before things get too serious - get debt management advice from a trained budget adviser from the NZ Federation of Family Budgeting Services. You can call them free on 0508 BUDGET (0508 283 438).

If you are having trouble making repayments for goods bought through a hire purchase or credit sales agreement, find out about your options on the Ministry of Consumer Affairs website.

What to do if you’re in serious trouble

If your debts are causing you serious financial trouble, your options include:

• Applying for a Summary Instalment Order - which allows you to repay your debts in regular instalments without the threat of legal action (provided your unsecured debts total less than $40,000).
• Applying for a No Asset Procedure (NAP) - if you have no means of repaying any amount towards your debts.
• Or, as an absolute last resort - filing for bankruptcy.

For more information, visit the Insolvency and Trustee Service website.

Your credit history and how to check it

If you miss a debt repayment it can have a negative impact on your credit history and affect your ability to borrow in the future.

Lenders usually check your credit history whenever you apply for credit – whether it’s a mortgage, a personal loan, hire purchase, or a new credit card. Some employers even make credit checks when you apply for a job. A prospective landlord or insurer might also check your credit history.

They do this by making an enquiry to a credit reporting agency - an organisation that stores credit records and sells reports on an individual’s credit history to businesses.

What’s on your credit report

Your credit record will include any payment defaults recorded against your name. A default is where a payment has been overdue for more than 30 days, and the lender has taken steps to recover the outstanding amount.

A default can stay on your credit record for five years, even after you have paid the amount in full. There have also been cases of “identity theft” where someone applies for credit using another person’s name and then deliberately defaults on payments.

So it’s important to make sure the credit information held in your name is correct, and to keep your record clean.

How to check your credit record

By law you are entitled to request a copy of the credit information held about you by a credit reporting agency. If you want the information quickly (within five working days) you may be required to pay a reasonable charge, but otherwise there’s no cost.

To order a credit report, contact both the credit reporting agencies directly. The main agency in New Zealand is Veda Advantage (formerly Baycorp). Veda Advantage claim to hold files on 97.5 % of New Zealanders who actively use credit. The other agency is Dun and Bradstreet.

Make sure you select the regular application option if you don’t want to pay - it will take longer than an express service but there’s no charge. Find out more about your rights on the Privacy Commissioner’s website.

If you are concerned that your identity may have been compromised you should notify the Police. Their website has information on what you can do to protect your identity.

Veda Advantage can also load a monitor on your credit file to alert you to applications for credit made using your identity.