If you are finding it difficult to get a tenancy it could be because you have a debt against your name.

It can be frustrating not knowing why you aren’t getting a tenancy. We understand this and we are here to help. To find out if there is an outstanding amount owing against your name you can request your own credit file, free of charge by checking these credit bureaus.

Centrix

Equifax

Illion

If the credit bureau holds information showing that you owe money to a creditor, in many cases this will make it harder to get a tenancy.

If you are disputing an amount owing or anything related to a tenancy, this should be resolved in the following ways:

• Talk to your landlord/property manager
• File an application for mediation
• File an application with the Tenancy Tribunal to have the matter heard

The costs of collection are either paid for by the creditor (the person owed the money) or the debtor (the person who owes the money).

The liable party for these fees is determined by two things:

1. A provision/ clause

Did you agree to pay these costs at the time you entered into the contract? This means there would need to have been a clause in the contract stating that you would pay the costs of collection, should there be a situation where a collection occurs. If this clause is present then the creditor can chose to make the debtor liable. If this clause is not in the contract then the creditor is automatically liable for these costs.

2. Instructions

The creditor or acting creditor is responsible for instructing the collection agency as to the amount to collect. If a debt collection clause was present it is still the creditors decision as to what they instruct the agency to collect.

If you signed a tenancy/ finance/ other contract that contained a debt collection clause, you can contact the creditor or acting creditor and negotiate the liability of these fees.

If the creditor agrees to pay these costs then they will need to contact the debt collection agency with further instructions as to the liability of these costs.

Tenancy debts

The Residential Tenancies Act was updated in 2010 to enable landlords or landlords’ agents to have a clause within a tenancy agreement relating to debt collection costs.

Section 32 Residential Tenancies Act 1986

3) This section does not preclude a provision in a tenancy agreement requiring one party (the debtor) to reimburse the other party (the creditor) for any reasonable expenses or commissions paid or incurred by the creditor in recovering, or attempting to recover, any overdue payment that the debtor owes to the creditor under an order of the Tribunal.

Enforcement costs

Debts that are enforced through the District Court attachment order system will incur costs that will be stated in the attachment order paperwork.

When a debt is lodged it is the creditor or acting creditor (person who is owed the money) that is responsible for whether fees are added or not, New Zealand Collections follows the instructions provided by the creditor.

Negotiation of liability

Should a debt collection clause be present in the contract, and when lodging the debt for collection creditors can consider who to make liable for costs and how the debtor incurred the debt in the first place.

There are a number of ways in which a debtor can’t get into debt, and these could be considered when deciding who is liable for debt collection costs.

Did the debtor incur the debt as a result of a change in circumstances? Are they simply experiencing hardship? Is the debt related to hardship caused by Covid 19? Or is the debt related to malicious damage or cleaning? Or was the debtor careless? All of these considerations should be taken we deciding who is liable for the cost of collection.

The first step with any debt issue is always talk to your lender or debt collector, or ask a free financial mentor to do this for you. If this doesn’t resolve your issue, you have options for taking it further:

• Financial dispute resolution scheme— for complaints about your lender/debt collector, eg high fees or giving you a loan you could never afford (Financial Disputes Resolution Schemes).
• Privacy Commissioner— for breaches of privacy, eg telling your family and employer about your debt without your permission.
• Commerce Commission— for complaints involving the Fair Trading Act or the Credit Contracts and Consumer Finance Act. You can complain to the Commerce Commission and the financial disputes resolution scheme at the same time. The scheme will seek resolution for your specific problem, and the Commission focuses on the breaches in the law.

You can also get free legal advice from Community Law (Community Law).

There are a number of financial mentors you can contact for free confidential advice to talk through your options and make sure the debt is accurate. They can also talk to debt collectors on your behalf. You can learn more about your options here – MoneyTalks.

If you don’t believe you owe the money, or think you owe less, tell the lender or debt collection agency in writing as soon as possible. This is called disputing the debt. Debt collection and repossession processes must stop until the dispute is settled.

Whether you have a good credit score, bad credit, or no credit at all, your credit history and score impact your life.

Your credit history is how future lenders, landlords, insurance providers, employers and more may decide if you are a relative risk when it comes to stability around money.

When a debt is lodged with a debt collection agency, it then may be loaded with a credit bureau.

While your information is held by a credit reporting company, not you, you can take back control of your credit score by understanding:

• how to check it
• how to fix errors
• how to improve bad credit and build a good credit history
• time limits for items in your history, eg missed payments and defaults
• what to do if something goes wrong.

Learn more about credit checks, scores and history here – Credit Scores

There are time limits for how long particular entries stay on your credit history.

Most information stays on your credit history for lenders and organisations to see for four to five years, eg default payments, bankruptcy, hardship.

Some information is kept for two years, eg missed payments.

A default payment is a payment over $125 overdue for more than 30 days, and the lender made efforts to recover the money.

Some information is kept indefinitely including:

• Identification information
• Multiple bankruptcies

NZ Collections is a debt collection agency helping recover and resolve debt, while a credit bureau manages a customer’s credit rating. Credit bureaus provide credit record information to businesses and organisations who extend credit for purchases, services or loans.

You can get a free copy of your credit report from these three credit reporting companies:

Get my credit report — Centrix

Personal credit alerts and reports — Illion

My credit file — Equifax

They should deal with your request within 20 days. If it takes longer, they must tell you why. If you need your credit record urgently, you may need to pay a fee to get it more quickly.

These companies will often give you a copy of your credit record (a summary of your credit history) but may not give you a credit score — the number given to lenders, landlords and others.

One option to get an approximate credit score is the Credit Simple website. It will give you an idea if your credit score is good or bad. But if you want full details — your credit report and history — go through the three credit reporting companies above.

See your credit score — Credit Simple

When you apply for a loan or insurance, the company will check your credit with one of these credit reporting companies. It’s a good idea to regularly check all three for errors.

If you do not repay a debt this will impact your credit rating which may make it harder to get finance or a tenancy.

If you are on a repayment plan it shows a property manager or landlord or other potential creditor that although there is a debt, it is being repaid. This is why it is best to have open communication with the collection agency involved and get a repayment plan in place.

Even if you are repaying the debt on a repayment plan, for as little as $5 per week, this will at least show on your credit file as being repaid.

Once a lender has obtained judgment from the court that you owe a debt, they can apply for an order to enforce the judgment. The different methods of enforcement are explained below.

Financial assessment hearing

A financial assessment hearing is often used as a first step to establish a debtor’s financial circumstances and whether they’re able to pay the debt. Here you’re ordered to come to court to be questioned about your finances by the court registrar.

The registrar can order you to pay off the debt by instalments or make another kind of enforcement order.

Attachment order

An attachment order requires your employer to take money directly from your salary or wages to pay the debt to the lender. These orders can also be made against your benefit or ACC payments. An attachment order can be made once a financial assessment hearing has been held and in certain other situations.

Warrant to seize property

The court can issue a warrant authorising a court bailiff to enter premises (for example, your home) to seize money or goods belonging to you (other than necessary tools of trade up to $5,000 and necessary household furniture and effects, including clothing, up to $10,000). The goods may then be sold to pay off the debt. (A warrant to seize property used to be called a “distress warrant”.)

Charging order

A charging order can stop you from selling the land or property that the order identifies until the lender has the opportunity to seize or sell the property (or until the debt is paid).

Garnishee order

If someone else owes you money (for example, your bank, if you have money in a bank account), the court can make a garnishee order requiring the third party (for example, the bank) to pay the money directly to the lender.

Community work

If the court is satisfied that you can pay the debt but are simply refusing to do so, it can order you to do community work for up to 200 hours. The court can do this after a financial assessment hearing has been held and in certain other situations. However, in all cases the court must be satisfied that all other enforcement methods are inappropriate or have already been tried unsuccessfully.

Debt sold to a debt collector

The debt collector is now the creditor so must follow the CCCFA and responsible lending code, like the original lender did.

This means charging reasonable fees — enough to cover costs, but not earn a profit. These fees need to be in the contract. If fees seem high, ask them to explain the amount.

If you have a problem with the fees, contact the debt collector first. If you cannot solve the issue, try their financial dispute resolution scheme.

If the debt collector buys the debt, the debt collector must be part of a financial dispute resolution scheme.

Debt collector hired by lender

Any fees the debt collector charges the lender can be passed on to you if it says so in the contract. Your lender must pass the fee on at cost, ie not add anything to it.

If you think the debt collector’s fees are too high, complain to the lender. If that doesn’t work, try the lender’s dispute resolution scheme.

You can also complain to the Commerce Commission.

Where two or more parties are liable for the same loss or damage to another party, because of separate wrongful acts, the joint and several liability rule holds both or all of the wrongdoers 100% liable for the loss caused. The party who suffered the loss can claim against one wrongdoer to recover the whole of the loss. The defendant can then seek contribution from any of the wrongdoers.

Each collection agency will only have information about you if a creditor has lodged a debt against your name. If you wish to find out if New Zealand Collections has any personal information about you please email admin@nzcollections.co.nz