The defeat of the ‘zombie loan’ that wouldn’t die.
A car-loan ordeal is over for a superannuitant who went hungry as a finance company hounded him to pay for a vehicle it had repossessed. Rob Stock reports.
Retiree Bobby O’Connor can look forward to Christmas knowing his ‘zombie’ loan is finally dead.
Auckland company Debt Resolutions was seeking to collect just over $6700 from O’Connor relating to a loan taken out in 2012, but after being contacted by the Sunday StarTimes, the company has now written off the debt.
Zombie loan refers to a debt a lender makes efforts to collect after having long forgotten it.
The resurrection of O’Connor’s loan occurred in 2018, when Debt Resolutions successfully applied to the Manukau District Court to get an attachment order placed on the retiree’s New Zealand Super payments, leaving him $35 a week less to live on.
O’Connor, who lives modestly in a single-room unit in the Auckland suburb of Manurewa, said that left him reduced to eating biscuits at times.
‘‘That was a quarter of my money gone for the week, which meant I could not buy food properly. I was going hungry,’’ he said.
The loan Debt Resolutions was seeking repayment of was all that was left of a loan O’Connor took out in 2012 to buy a 2002 Nissan Serena for $13,495 from a dealer called Aqua Cars. with the loan coming from related company Aqua Finance.
O’Connor actually borrowed $16,430, even after paying a $300 cash deposit.
That was because he agreed to added extras including a $1195 payment waiver, supposed to cover the instalments should he fall ill, a $595 two-year mechanical warranty, a $650 rental fee for a tracking and immobilisation device to help the lender in case the car needed to be repossessed, a $300 loan fee, and something called a ‘‘Restart Waiver’’ for $495.
But when O’Connor suffered a spinal injury on a flight to
China weeks later, he was trapped out of the country for months, he missed loan repayments, and the car was repossessed and sold for $7000.
The payment waiver did not cover the missed payments because it did not cover health events outside of New Zealand.
With repossession costs included, O’Connor was left owing just under $10,700.
But O’Connor said he was told in 2012 that the sale of the car cleared the loan, a claim Debt Resolutions disputes.
Debt Resolutions is part of the Finance Investment Group, to which Aqua Cars also belongs.
Records obtained from Debt Resolutions under the Privacy Act show that from July 2012 to July 2018 no repayments were made, and though he did not move, the lender lost track of him after recording his house number wrongly.
These records show it did make contact with O’Connor in November 2016, recording that he refused to pay, telling them the repossession was illegal, and the insurance should have paid the loan off.
In August, O’Connor went into Debt Resolutions’ office and made a tearful plea during a 90-minute meeting for the attachment order to his NZ Super to be lifted.
O’Connor said that he explained again what had happened to him in China, telling them the injury had left him permanently impaired.
‘‘Several of them were in tears when they found out the full facts,’’ O’Connor said.
Following the meeting, the company applied to the court to remove the attachment order.
But then Debt Resolutions began asking O’Connor to agree to voluntary repayments, and even said it would seek a new attachment order.
O’Connor was able to get a copy of the court file, including the letter the company had written which states: ‘‘loan balance is being written off’’.
When first contacted by the Sunday Star-Times, Debt Resolutions offered $300 towards the cost of a budgeter to determine what O’Connor could afford to pay each week. Debt Resolutions said it would accept the adviser’s decision, even if it was found O’Connor could not make payments.
After being reminded of its pledge to the court to write the loan off, Debt Resolutions said it had ‘‘come to our attention’’ that the court records showed that the ‘‘loan balance is being written off’’.
‘‘This was a complete oversight on our part and had it come to our attention earlier, we would have settled this matter much sooner, and we do apologise for the confusion.’’
O’Connor said the experience had left him stressed, losing weight, and suffering from depression.
In early October, after calling O’Connor, a Debt Resolutions employee recorded: ‘‘Clt (client) started crying on the phone again, saying that he is not a bad person, nothing of what happened is his fault, even mentioned that he does ‘not want to be in this world anymore’.’’
O’Connor said he was pleased the ordeal was now over.