Trouble with debt
Help with debts
If your debts are getting out of control or you're struggling to
make ends meet, it's important to act quickly.
Here are we explain the practical steps you can take to ease the
stress, get your finances back on track, and understand your rights
if a lender takes legal action to recover a debt.
Talk to your credit provider
If you are finding it hard to keep up with utility bills
(electricity, gas, phone or water), credit cards or loan
repayments, the first step is to tell your credit or service
provider that you're experiencing financial hardship. Taking action
straight away can stop a small problem becoming a big one.
Many companies have hardship officers who can assess your
situation and work out what help is available. Whether they can
help you will depend on why you are having difficulty making
payments and how long you think your financial problems will
Hardship officers can also help you work out an affordable
payment plan, such as paying bills in instalments or temporarily
altering your loan repayments.
Apply for a hardship
If you can't keep up with repayments on your credit cards or
loans (for example, because of illness, unemployment or changed
financial circumstances), ask your credit provider for a 'hardship
For a home loan, depending on when you took it out there are
different thresholds (maximum amounts allowed) for accessing a
hardship variation, see hardship threshold.
How to apply for a hardship variation
- Contact your lender or credit provider - by phone or in
- Ask to speak to a 'hardship officer' or to 'customer
- Give the details of your loan (account name and number, and the
amount you pay each week/fortnight/month)
- Say that you want to change your loan repayments because you
are experiencing hardship (as set out in section 72 of the National
Consumer Credit Code)
- Explain why you are having difficulties making payments, how
long you think your financial problems will continue and how much
you can afford to repay
Sample hardship letters
The Financial Rights Legal Centre have a sample letter generator to help
you create professional and legal letters to send to financial
service providers like banks, creditors and insurance
How long should the lender take to respond?
When you apply for a hardship variation, the credit provider
must respond to your request in writing within 21 days letting you
know the outcome of your hardship request (unless you need to
provide them with more information).
If the credit provider asks you for more information to help
them make a decision, you must give this to them within 21 days.
Remember that credit providers have a legal obligation to respond
to you if you are having problems paying your loans.
How you can change your repayments
Here are some of the options you could discuss with your
- Extend your loan period, so you make smaller repayments over a
- Postpone your repayments for an agreed period
- Extend your loan period AND postpone your repayments for an
- Other ways to make your loan repayments more affordable
When negotiating a repayment plan, make sure you can afford it.
There is no point agreeing to an amount that is too high for you to
If you find you can't stick to the new arrangement, tell your
credit provider straight away. Keep paying as much as you can
afford, even if it is not as much as the credit provider is asking
You can complain
If your credit provider refuses your hardship
application, they must give reasons. If you are not happy with
their response you can ask to speak to their internal complaints
If you are still not satisfied with the outcome, you can lodge a
dispute (for free) with your credit provider's external dispute resolution (EDR) scheme -
the Australian Financial Complaints Authority
(AFCA). You can call them on 1800 931 678.
Ask for help if you're struggling
You don't have to go it alone. There is free and confidential
help available to assist you to get a clear picture of your
situation and understand your options:
- Financial counselling: A free service offered
by community organisations, community legal centres and some
government agencies, see financial counselling.
- Free legal advice: Available from community
legal centres and Legal Aid offices in each state and territory,
If you're in a crisis and need emergency relief or emotional
support see our urgent money help
If some of your financial problems are due to another person
running up debts in your name, or pressuring you to spend money or
sign up for a loan, you may be experiencing financial abuse. Visit
abuse webpage for a list of organisations that can help
If you are being intimidated by someone trying to recover
a debt, there are things you can do to stop their threatening
behaviour. See dealing with debt
Debt solution companies
It might sound like a good idea to pay someone to help fix
your credit history, but credit repair agencies and debt solution
companies may not always be able to do what they claim. Find out
solution companies can and can't do for you.
What to do if your lender takes
you to court
If you have received a notice that you are being taken to court
for the debt you owe (such as a summons, statement of claim or
liquidated claim), you must act quickly.
Decide if you agree you owe the debt
The first thing to do is to decide whether you agree that you
owe the debt or dispute it. Legally, you may not have to pay the
debt if it is an old one.
Apply to pay by instalments
If you agree that you owe the debt but can't pay the full
amount, ask your lender or credit provider whether you can pay off
the debt by instalments.
Or you can go to court and make an application to pay the debt
Request a postponement of enforcement
You have the right to request a postponement of enforcement from
your credit provider to stop the repossession of your goods or
home. Use our sample letter request for
postponement of enforcement to draft your letter or you
can go to court and request a postponement of enforcement.
Get help from a dispute resolution service
You can talk to the Australian Financial Complaints Authority
(AFCA) on 1800 931 678 about whether they can help you. This won't
cost you anything. You will generally only be able to lodge a
complaint with AFCA after you have tried to negotiate with the
Keep making repayments on your home loan
If you go to AFCA and your debt involves outstanding repayments
on your home loan, do your best to keep making repayments (even if
they are small or less frequent). This will help you avoid getting
into a worse financial position while your dispute is being
If a hardship variation will not assist you or the value of your
home is falling, then you may be better off dealing with your
lender in court as quickly as possible, rather than risking further
delay by going to AFCA.
Just remember that a lender must take a number of steps before
it can repossess your home, so don't panic. See problems paying your
mortgage for details.
Case study: Emily gets help on her debts
Emily is in her 60s and has a chronic health
condition that only allows her to work a few days a week.
She has two credit cards from the same lender that are both
maxed out. One card has a limit of $5,000. Over a 5-year period,
the credit limit on the other card has grown from $3,000 to $20,000
as Emily has said yes to invitations to increase her limit.
When Emily's condition worsens, she is unable to work and falls
behind on the monthly repayments on her $25,000 debt. The
lender starts legal action to recover its money. Having no savings
or assets to sell, the only way Emily feels she can pay back the
lender is to sell her family home.
She gets advice from a community legal service, which helps her
make a complaint to AFCA. Emily's complaint is that the lender
did not assess her ability to repay her debts before offering her
AFCA hears Emily's complaint for free and makes a decision that
allows her to keep her home and pay off a reduced debt of $10,000
by monthly instalments.
Money problems are stressful but you do
have options. Take action now by talking to your credit or service
provider and working out a plan to get yourself back on
Last updated: 02 May 2019