Frequently Asked Questions
What is the Privacy Act
Prior to 1988 there were no consumer protection laws in relation to an individual’s right to privacy. Anyone who was a member of the major credit bureau (then CRAA) could gain access to the information it held by paying a fee
Real estate agents, private investigators, car yards, debt collectors, video stores, tradesman etc all had access to the bureau.
This widespread access caused misuse and abuse of personal information which was hard to regulate or control.
In 1986 the then Hawk Labor government addressed the problem by introduced a draft privacy bill into parliament.
That bill after much opposition from the Liberal government gained Royal ascent in 1988 and became known as the Privacy Act 1988.
After the introduction of the Privacy Act, CRAA the predecessor of Baycorp lost 1/3 of its 4,000 clients due to the narrowing of those lawfully allowed to access the credit bureau to traditional credit providers such as banks and finance companies.
After several minor amendments the Privacy Act has remained virtually untouched.
Who has access to my credit file?
Your credit file contains sensitive and personal information which is protected from unlawful access by the Privacy Act.
If you apply for personal consumer credit the credit provider must ask your permission before they can access your credit file.
Normally, a credit provider will obtain your consent by asking you to sign a consent form however consent may be obtained orally and in this case the onus of proof for obtaining such consent will vest with the credit provider.
Unauthorised access to a consumer credit file is a serious offence under the Privacy Act and may attract a penalty on conviction of up to $150,000 for each occurrence.
For the above reason it is unwise for a credit provider to obtain its consents orally without making a record, diary note or key stroke of the consent.
Who can default me?
In 1991 the Privacy Commissioner significantly amended the Privacy Act by widening the definition of a “credit provider” for the purpose of the Privacy Act to mean anyone that defers a debt for more than 7 days regardless of whether there is any formal contract in place which would assist a consumer in the event that they disputed the debt.
This unfortunate determination was the result of the Commissioner adopting the position formed by lobbyist representing various groups such as small business and credit reporting bureaux who wanted a winding not a narrowing of the businesses able to access the credit reporting bureau.
Today, just about anyone who is deemed to be a credit provider can access the credit bureau and publish a default against you. This means nearly all of the business that originally became excluded on the introduction of the Privacy Act were now able to access the bureau providing they comply with all of the statutory obligations imposed upon credit providers by the Privacy Act and Part IIIA of the Act, the Credit Reporting Code of Conduct.
It is important to note that it is a prerequisite for credit providers to have first complied with section 18E(8)(c) of the Privacy Act by notifying the individual that on the event of default and non compliance with the default notice, the credit provider may publish the overdue account with a credit reporting bureau.
The Privacy Act requires the credit provider to notify the individual at the time or prior to collecting the individual’s personal information that this is a primary purpose for collecting the personal information.
Failure to notify the individual as above, will prevent credit providers from lawfully being able to publish a default against the individuals.
What is a default?
A default is the express opinion of a credit provider that an individual has failed to comply with their obligations pursuant to a contract or agreement whereby a debt has been deferred and that debt has not been repaid in accordance with the terms and condition of the agreement.
When can a default be published against me?
Before a debt can be published with a credit reporting bureau, the debt must first be 60 days overdue and the credit provider must have given the debtor a default notice giving the individual a period of time to pay the debt before publishing the default with a credit reporting bureau.
The Privacy Act does not express any particular time scale to be given to the debtor in order to pay the debt which is unfortunate as a notice giving 3 days to pay the debt in some circumstances may be compliant with the Act. However, such a short period of time may be deemed unconscionable conduct pursuant to the Trade Practices Act 1974.
The Privacy Act’s unfortunate omittance on this point may be the result of the draftsman of the Act recognising that with the narrowing of the definition of a credit provider to that of credit providers in the traditional sense such as banks and finance companies, consumers would also be afforded protected under the Credit Act 1986.
Section 107 of the Credit Act requires credit providers to give a debtor more than 30 days to remedy a default before any enforcement action may be commenced.
Today only if the debt is regulated by the Consumer Credit Code 1995 such as finance and credit contracts, will a set time period of 30 days be required.
What is a judgment?
Judgments relate to court proceedings and a subsequent order made by a magistrate that one party (normally the debtor) owes the other party (normally the plaintiff) a debt.
The order becomes publicly available information which the credit bureaux upload direct from the courts onto their internal databases on a day-to-day basis.
Credit providers are very concerned when they see judgments as this is an indication that the person or corporation is in financial trouble.
How long will the black mark stay on my credit file?
A Default will remain on your credit file for 5 years from the date it is published on the credit bureau.
A Judgment will remain published on your credit file for 5 years from the date of the judgment or order handed down by the court.
A clearout which is the worst form of default will remain published on an individuals credit file for 7 years
The Privacy Act allows credit reporting bureaux to publish sequestration orders made under the Bankruptcy Act 1966 for a period of 7 years.
Debt agreements and composite arrangements made pursuant to Part IX and X of the Bankruptcy Act 1966 are not sequestration orders and are therefore only permitted to be published by a credit reporting bureau for a period of 5 years.
Will paying the default remove the black mark from my credit file?
Paying the debt will not remove the default or judgment.
A default will remain published for a minimum of 5 years.
Defaults and judgments warn other credit providers who you may apply to for credit that you have defaulted on your obligations and may default again.
Credit bureaux make money from reporting default information. The more default information they hold the more valuable their database becomes to shareholders.
Credit Bureaux will try and hold onto the default information and are reluctant to remove any information once recorded.
Only people that avoid paying their debts will become default listed.
Despite common opinion, defaulters are represented from all walks of life from factory workers, small businesspeople, policeman, politicians and doctors.
In some judgment cases the individual has not been served properly and as a result the individual has no idea that an order has been made against them.
Companies are especially vulnerable as the law requires companies to be served by ordinary mail at their registered office. In most cases the registered office is located at the office of the companies accountants and indivertibly the complaint goes astray.
When this occurs, important documents such as writs, suits, complaints or originating process are not forwarded on to the company directors in a timely manner resulting in default orders or worse.
I have a good job so I will be able to get credit regardless of the bad mark against me.
Defaults have no bearing on status, once defaulted a person is categorised and branded as a defaulter
Most credit providers use automated application processing to approve loan applications. Whilst you may score excellent points by having a good and stable job a credit check which reveals defaults or judgment information will ordinarily prevent an application from being approved automatically.
I only have a default for under $200 dollars so this will not affect me.
In most cases automated application processing will not be able to identify the size of the default or judgment. The computer will treat a $100 dollar debt the same as a $100,000 dollar debt.
Why should I spend the money to remove the default?
There is definitely a benefit for those who qualify for Latham Moore’ & Associates credit restoration services.
This benefit could be in the form of a lower interest rate for a loan resulting in a lower monthly repayment or the ability to obtain credit through automated application processing which most finance companies have adopted.
The ability to borrow money from traditional lenders instead of non conforming lenders.
The ability to open trade accounts.
Not having to face embarrassing explanations or interrogation from credit providers as to why the default or judgment occurred.