Creditor-initiated mediation process and forms
Creditors are required to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages.
If you are a farmer and are planning to be away from your farm at a time when you believe there is a risk a creditor may seek to commence recovery action, then it is important to ensure someone is checking your mail, email or fax, or you have someone who can act on your behalf.
This is the process and forms used for a creditor-initiated mediation process:
Notice of availability of mediation (Form 1)
The creditor must write to the farmer advising that farm debt mediation is available. To initiate this process, the creditor sends Form 1 to the farmer:
Form 1 advises the farmer:
- that the creditor intends to take enforcement action
- mediation between the farmer and the creditor is available
- the farmer has 21 days from the date the notice was given to respond to the offer to mediate
Along with Form 1 the creditor must also include:
- a copy of Form 2 to allow the farmer to request mediation
- the mediation guide
- the contact list for the Victorian Rural Financial Counselling service
If the farmer does not respond (or refuses mediation) a creditor can commence recovery action as normal.
Accepting offer for farm debt mediation (Form 2)
If the farmer agrees to mediation, they respond in writing to the creditor's offer. Mediation is provided by trained and experienced mediators through the Victorian Small Business Commission. The mediator acts as a neutral and independent person, who works to assist farmers and creditors to reach an agreement about current and future debt arrangements.
To accept the offer to mediate, the farmer sends Form 2 to the creditor.
Farmers have 21 days to respond to the offer to enter into mediation with their creditor.
Notice to Department of Jobs, Precincts and Regions that mediation is required (Form 3)
Once the creditor receives a request to mediate from the farmer, the creditor contacts the Department of Jobs, Precincts and Regions (DJPR) to advise the farmer has accepted the offer to mediate.
The creditor sends Form 3 to DJPR with a copy of Forms 1 and 2.
DJPR then provides the parties' details to the Victorian Small Business Commission to organise mediation.
The Victorian Small Business Commission contacts the farmer and the creditor and provides both parties with preliminary assistance, including:
- discussing the objectives of mediation
- the responsibilities of both parties
- determining a mutually acceptable time and place for mediation
The Victorian Small Business Commission appoints a mediator. The mediator conducts mediation between the farmer and creditor, discussing options for managing present and future farm debt arrangements.
At the end of mediation, the farmer and creditor can agree to sign a binding agreement to resolve the dispute. The creditor must ensure that any binding agreement between the parties is reflected in any:
- other instrument
Form 4: Request for an exemption certificate
Application for exemption certificate under Section 15
The creditor may request an exemption certificate from the Victorian Small Business Commission. To apply for an exemption certificate, they send Form 4 to the Victorian Small Business Commissioner.
If the Victorian Small Business Commission considers that satisfactory mediation has taken place, it will issue an exemption certificate, allowing the creditor to commence recovery action.
Form 5: Exemption Certificate
The exemption certificate (Form 5) will be issued by the Victorian Small Business Commissioner if all requirements are met.
Mediation may still be considered satisfactory, even when no agreement is reached between the parties. For farm mortgages, an exemption certificate remains in place for 3 years.
Form 6: Farmer does not wish to proceed with mediation
Decision not to enter into or proceed with mediation
At any stage the farmer may send Form 6 to DJPR or their creditor if they do not wish to participate or continue mediation.
Where to send requests
All requests for mediation should be sent via email to firstname.lastname@example.org.
Call the Department of Jobs, Precincts and Regions on 136 186 and ask for the farm debt mediation officer.