Comments on National Hardship Register Review

Although we often help vulnerable debtors who are seeking debt waivers we have not used the NHR since its inception. We agree with the purpose of the initiative (creating an efficient and cost-effective mechanism for financial counsellors and industry to avoid futile debt collection activity for people in severe financial hardship), but we believe the Register suffers from several design flaws which prevent us from wanting to use it for our clients:

• three years of uncertainty is a long time when waivers can often be obtained immediately for clients who would qualify. The NHR provides no guarantee of eventual waiver;
• there is a lack of clarity about future implications;
• there is a lack of clarity about the credit reporting implications;
• there is a lack of clarity about statute of limitations effect (Does the NHR count as an acknowledgement of debt? Could the limitations time be extended because of the collections break?)
• bankruptcy could often result in discharge in 3 years, so does that make the NHR redundant?; and
• we have concern that greater use or expansion of the NHR might mean that creditors would stop giving waivers and refer to debtors to the NHR instead (this has happened for one of our clients).

In practice we have found that none of our clients have had the right combination of creditors for the NHR to be useful. Usually only one or maximum of two creditors are participating with the NHR and often several others are not. In these circumstances our financial counsellors and solicitors decide that applying for the NHR will not provide the benefits to outweigh the risks and uncertainty of putting our client on the NHR. We have always decided that it would be better to apply separately for waivers from each creditor.