Auckland pensioner wins his fight against 'zombie loan'

Friday, 4 December 2020

Pensioner Bobby O'Connor went hungry after the courts diverted $35 a week from his NZ Super to repay a loan he thought had been settled in 2012. (First published in 2020.)

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 Stuff, the company has now written it off.

Zombie loan is the term used for a loan which has been long forgotten by a lender, but comes back to life years later when the lender makes efforts to collect 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.

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Bobby O'Connor is now looking forward to the New Year knowing he is no longer being pursued for a car loan.

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O’Connor, who lives modestly in a single room unit in the Auckland suburb of Manurewa, said that left him struggling to feed himself, sometimes eating only biscuits.

“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 like a $1195 payment waiver, supposed to pay the loan instalments should O’Connor 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 he had been sold 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 loan had been cleared by the sale of the car, a claim disputed by Debt Resolutions.

Debt Resolutions is part of the Finance Investment Group, to which Aqua Cars also belongs.

Records obtained from Debt Resolutions using the Privacy Act show that from July 2012 to July 2018 no repayments were made on O’Connor's loan, and that though he did not move, the lender lost track of him, after recording his house number wrongly.

Debt Resolutions proclaims: “We’re open, we’re 200 per cent ethical and we always do the right thing.”

These records show it did make contact with O’Connor in November 2016, recording that O’Connor refused to pay, telling them the repossession was illegal, and the insurance he had been sold 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 in the meeting he explained again what had happened to him in China, telling them the injury had left him permanently impaired, including affecting his memory.

“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 Stuff, Debt Resolutions offered $300 for O’Connor to see a budgeter, and for the budget adviser to determine what O’Connor could afford to pay each week towards clearing the debt.

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 Resolution 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.