Creditor-initiated mediation process and forms

Under the Farm Debt Mediation Act 2011 (the Act), creditors are required to offer mediation to farmers before starting 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 attempt to start recovery action, then it is important to make sure someone is checking your mail, email or fax, or that you have someone who can act on your behalf.

This is the process and forms used for farm debt mediation where the creditor initiates the process:

The creditor notifies the farmer of the availability of farm debt mediation (form 1)

To initiate the process, the creditor must write to the farmer advising that farm debt mediation is available, using form 1:

Download form 1 to complete in Word: Notice of availability of mediation

Form 1 advises the farmer:

• that the creditor intends to take enforcement action
• mediation between the farmer and 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 copies of:

• forms 2 and 6 (linked to below) to allow the farmer to accept or decline the offer of mediation
• the Victorian Small Business Commission’s (VSBC) Farm debt mediation fact sheet and Guide to mediation

If the farmer does not respond within 21 days or refuses mediation, the creditor can request an exemption certificate from the VSBC to allow them to start recovery action. Creditors are required to obtain an exemption certificate in all instances before taking enforcement action, including when a farmer has not responded to their offer of mediation.

The farmer accepts the offer of mediation (form 2)

If the farmer would like to enter into mediation with their creditor, they must respond in writing to the creditor requesting mediation, using form 2:

Download form 2 to complete in Word: Farmer accepts creditor offer of mediation

Farmers have 21 days to respond to the offer to mediate.

The creditor notifies the Victorian Small Business Commission that creditor-initiated mediation is required for a farm mortgage (form 3)

Once the creditor receives notification from the farmer that they agree to mediate, the creditor notifies the VSBC of this agreement and advises that creditor-initiated mediation is required.

The creditor sends form 3 to the VSBC with copies of forms 1 and 2:

Complete form 3 via our help portal (if you would like this form in an accessible Word version, contact us): Notice that creditor-initiated mediation is required

Once notified, the VSBC contacts the farmer and creditor to provide early help, which includes giving both parties guidance on their rights and obligations, giving farmers information on available supports, appointing a mediator and arranging a mediation session.

At mediation, the farmer and creditor come together with an impartial and experienced mediator to discuss options for managing current 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 contract, deed, mortgage or other instrument.

The creditor requests an exemption certificate (form 4)

Under section 15 of the Act, the creditor can request an exemption certificate from the VSBC using form 4:

Complete form 4 via our help portal (if you would like this form in an accessible Word version, contact us): Creditor request for exemption certificate

If the VSBC considers that satisfactory mediation has taken place, we may issue an exemption certificate, allowing the creditor to start recovery action. Mediation may still be considered satisfactory when no agreement is reached between the parties.

In situations where mediation Terms of Settlement are in force, the creditor should not proceed with enforcement action where the said Terms of Settlement are being met.

The exemption certificate (form 5)

An exemption certificate (form 5) may be issued by the VSBC. The VSBC has some discretion in the issuing of these certificates.

For farm mortgages, an exemption certificate remains in place for three years.

The farmer does not want to enter into or continue with mediation (form 6)

If the farmer does not want to enter into or continue with mediation at any stage, they must send form 6 to the VSBC or their creditor:

Download form 6 to complete in Word: Notice of decision not to mediate

More information

For more information:

• see our farm debt mediation forms, FAQs and information on important changes to the Farm Debt Mediation Act 2011
• access information for creditors
• contact us.

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