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Mortgage stress handbook

9. The lender has taken action against me in court

If you receive a Court document titled a Statement of Claim, Summons or a Writ then the lender may be taking legal action for:
  • The whole debt and/or
  • The arrears (the amount you are behind in repayments) and/or
  • Possession of your home
You can tell you have received a Statement of Claim, Summons or Writ because:
  1. It will have a stamp from the Court on the document
  2. It will have the lender’s details and your details
  3. It will be titled Statement of Claim, Summons or Writ
  4. It will have details of the mortgage and that you failed to make certain payments as required under the loan
  5. It will tell you how long you have to respond to the Statement of Claim, Summons or Writ

If you are unsure whether you have received a Statement of Claim or Summons get legal advice.

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You only have a short period to respond to a Statement of Claim, Summons or Writ­—between 7 and 28 days (depending on where you live in Australia) to respond. If you do not respond within the required time then the lender can apply to the Court for judgment for possession of your home.
When you get a Statement of Claim, Summons or Writ you have 3 options:
  1. Lodge a dispute with a dispute resolution scheme arguing you are in financial hardship
  2. Lodge a defence and cross claim in Court arguing you are in financial hardship
  3. Do nothing (not recommended)
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It is strongly recommended you proceed with option 1 – which is to lodge a dispute with a dispute resolution scheme rather than options 2 or 3.

A dispute resolution scheme is free and the lender cannot proceed to judgment while the dispute resolution scheme is considering your financial hardship dispute. You should only consider option 2 of lodging a defence and cross claim if you were not successful at the dispute resolution scheme or cannot use a dispute resolution scheme (for example, because your lender is not a member or a third party involved in causing you loss is not a member).

Lodging a dispute with a dispute resolution scheme

See Chapter 7 for details on how to lodge a dispute with a dispute resolution scheme. If you are lodging a dispute with a dispute resolution scheme after you have received a Statement of Claim or Summons you need to:
  • Make sure the dispute resolution scheme know you have received a court document. You should note this on your dispute/complaint form.
  • The court document will tell you how long you have to respond.
  • Lodge a dispute with the dispute resolution scheme as soon as possible after you received the Statement of Claim, Summons or Writ. You will not be able to lodge in the dispute resolution scheme after the lender has got judgment so you need to move fast to make sure you are in the dispute resolution scheme well before the lender can apply for judgment.
  • If you are close to the deadline to file a response to the Statement of Claim, Summons or Writ you should also call the dispute resolution scheme to make sure it has received your dispute/complaint and has told the lender that it has received your dispute/complaint.
  • Even if you are negotiating with the lender you need to lodge a dispute with a dispute resolution scheme just to make sure the lender does not get judgment while you work out an arrangement.

Filing a defence and cross claim in court

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This should only be considered if you cannot go to a dispute resolution scheme or you have been unsuccessful in a dispute resolution scheme. If your loan is over a certain amount you may not be able to go to court. You should get legal advice before filing in the Court.

A court defence and cross claim needs to be tailored for your own case. Not all States/Territories have a cross claim. If there is no cross claim incorporate the cross claim into the defence. Get legal advice on your situation!

Remember Remember

Going to court is risky! If you lose you will usually be ordered by the Court to pay the legal costs of the lender.

Sample defence and cross claim
A sample of the main facts you need to consider putting in a defence and cross claim appears in Chapter 13. The court forms you need to use will vary. A guide on what forms to use in each State and where to find those forms can be found in Chapter 13.

Checklist

Things you need to do if filing a defence and cross claim:
  • Get legal advice. Make sure you have a reasonable chance of success.
  • The defence and cross claim should be lodged before the time given to respond to the Statement of Claim, Summons or Writ expires. It must be lodged before the lender gets a judgment from the Court. The lender’s solicitors may agree to give you more time to file a defence and cross claim. In that case, you must lodge your defence and cross claim by that date.
  • You must lodge the defence and cross claim at the relevant court. For example, if you were issued with a Statement of Claim from the NSW Supreme Court you need to file your defence and cross claim at the NSW Supreme Court.
  • There may be a filing fee payable. Ring the Court and see if you can get the fee waived or postponed. If you cannot afford the fee and the Court will not waive or postpone the fee get urgent legal advice.
  • You must send a copy of any defence and cross claim that has been stamped by the Court to the lender’s solicitor.