Govt ramps up hardship assistance

The government has lifted the hardship threshold to $500,000 in a bid to shelter Australian households from the effects of the credit crisis.

The government will be introducing further regulation of consumer credit contracts in order to allow consumers to request a change to certain terms of their credit contract on the grounds of hardship, or a postponement of enforcement proceedings.

Currently, the threshold to access the hardship arrangements is set according to a complex formula that caps the access point at 110% of the average loan size for new dwellings in NSW as set monthly by the Australian Bureau of Statistics. It is currently $312,400 but that is set to change again on 12 May 2009.

Minister for Superannuation and Corporate Law, Nick Sherry, said that as a result of this threshold level, many families may currently be missing out on the help the hardship provisions can provide.

"We don't believe that either the current amount or the way it's calculated is in the best interests of hard-working families, so we're increasing the threshold to $500,000," he said.
"This means if homeowners find themselves in financial hardship they will be able to request help.

"We're also putting in place a new, simple and clear way of adjusting the threshold upwards in future, if we need to."

The changes are contained in the National Consumer Credit Protection Bill 2009, to be released today.

The threshold changes will take effect once the National Consumer Credit Protection Act commences, which is expected to occur on 1 November.