Financial company agrees to halve the debt of a victim of economic abuse

The decision of an Auckland finance company not to pursue a woman for the entirety of a loan she had left after an abusive relationship is a precedent that other lenders should heed, says the charity Good Shepherd.

Nicola Eccleton, head of social inclusion at Good Shepherd, said the woman incurred the debt after being forced to secure a car loan during an abusive relationship.

When she ended the relationship last year and her former partner stopped repaying her loan, Aotea Finance sued the woman for the full loan.

But after months of negotiations with Good Shepherd, Aotea Finance agreed to split the loan and only ask for half of the repayment, Eccleton said.

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Economic harm was a little-recognized form of domestic violence, but it was becoming increasingly well-known as activists and advocates, driven to raise its profile, she said.

This helped victim and survivor advocates negotiate fairer deals with lenders or cancel loans when lenders failed to meet their loan responsibilities.

“We’re undoing and setting new standards for expectations,” Eccleton said.

Nicola Eccleton, head of social inclusion at Good Shepherd, said the woman incurred the debt after being forced to secure a car loan during an abusive relationship.

Stacy Squires / Stuff

Nicola Eccleton, head of social inclusion at Good Shepherd, said the woman incurred the debt after being forced to secure a car loan during an abusive relationship.

In April, the case of another lender who went even further by writing off $12,000 owed by a woman in debt from an abusive partner, came to light.

In this case, the lender failed to carry out a proper affordability assessment and the woman complained to a complaints system.

The Bank of New Zealand revealed late last year that it had written off the debts of victims of economic abuse.

The woman being helped by Good Shepherd has a protective order in place and cannot be named.

She said her relationship was abusive and she was forced to secure a loan in 2021, so he could buy a car. His bad credit meant he wouldn’t qualify for a loan without the collateral, she said.

“Everything was fine at first, but over time he started controlling and demanding that I do what he said or there would be consequences,” she said.

“I couldn’t go to the shops alone. I couldn’t pick up the kids from school on my own,” she said.

“I couldn’t spend anything without him knowing.”

Her partner had arranged the guarantee and brought her the paperwork to sign, and she said she felt she had no choice but to agree.

“He brought it to me, then watched me sign it, then took it wherever it needed to go with it,” she said.

After interest and fees, the loan ended up at just over $3,200.

She said Aotea Finance asked her to repay the entire loan at a rate of $80 per week, which she could not afford.

Aotea’s chief financial officer, Terry Cooke, said there is no one-size-fits-all solution to such issues.

“Each case must be resolved frankly and factually on its own merits,” Cooke said.

“It is essential that all information about the loan and subsequent events be known, and that rarely happens,” he said.

Aotea's CFO, Terry Cooke, says there is no one-size-fits-all solution to such problems.

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Aotea’s CFO, Terry Cooke, says there is no one-size-fits-all solution to such problems.

“We can’t always resolve these situations because parties can become belligerent or difficult to manage,” he said.

Most of the loans were in common name and each party was responsible for the debt, he said.

“Sometimes a satisfying resolution is hard to come by, if customer advocates get involved, because they can become very protective of their customer, and the story they have can differ significantly from reality,” he said. he declares.

Women’s Minister Jan Tinetti said economic harm was a form of violence and abuse often overlooked.

“Given the short and long-term consequences of economic damage, we need to ensure the tools and resources are in place to manage the ongoing impacts for victims,” she said.

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