Trouble with debt

Help with debts

If your debts are getting out of control or you are struggling to make ends meet, it's important to act quickly. Help is available. Here are some practical steps to ease the stress and get your finances back on track.

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 talk with your credit or service provider and let them know you are experiencing financial hardship. Taking action straight away can stop a small problem from 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 will financial problems will continue.

Hardship officers can also help you work out an affordable payment plan, such as paying bills in instalments or temporarily altering your loan repayments.

These webpages give guidance on particular debt issues:

Apply for a hardship variation

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 variation'.

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

  1. Contact your lender or credit provider - by phone or in writing
  2. Ask to speak to a 'hardship officer' or to 'customer service'
  3. Give the details of your loan (account name and number, and the amount you pay each week/fortnight/month)
  4. 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)
  5. 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 creating professional and legal letters to send to financial service providers like banks, creditors and insurance companies.

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 lender:

  • Extend your loan period, so you make smaller repayments over a longer period
  • Postpone your repayments for an agreed period
  • Extend your loan period AND postpone your repayments for an agreed period
  • 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 pay.

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 for.

Case study - Megan seeks help

Lady On BusMegan is a single mum with two kids. She has been struggling to pay her bills for a while and her credit card payment is now two weeks in default.

Megan's friend suggested she see a financial counsellor. Megan met Jenny, her local financial counsellor, and Jenny was able to help her negotiate a repayment plan with her credit card provider and work out a plan to manage her other bills.

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 section.

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 - either the Financial Ombudsman Service (FOS) 1800 367 287 or the Credit and Investments Ombudsman (CIO) 1800 138 422.

Ask for help

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, see free legal advice.

If you're in a crisis and need emergency relief or emotional support see our urgent money help webpage.

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 our financial abuse webpage for a list of organisations that can help you.

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 what debt solution companies can and can't do for you.

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 track. You can apply for a hardship variation if you need to, or get help from a financial counsellor.

Related links

Last updated: 03 Jan 2018