Financial difficulty

When you are unable to meet your repayment obligations on your loans and credit cards, or pay your bills as they fall due, this is called financial difficulty or financial hardship.

If you continue to be financially impacted by COVID-19 and cannot meet your repayment obligations or pay bills you owe, you should talk to your lender or service provider as soon as possible to discuss your options for hardship assistance.

Most lenders and service providers, such as telcos and energy providers, continue to offer a range of support for customers who are in financial hardship because of the pandemic.

The type of options which may be available to you will depend on who your lender or service provider is and your personal situation. They will make an assessment on a case-by-case basis.

Options may include reducing your repayments for a period of time, accessing government concessions or grants to help pay your bills, switching to an interest only loan for a period of time, restructuring your debts or other options that are suitable for your situation.

If you cannot afford to pay anything, call us on 1800 007 007 straight away for advice.

When negotiating with your lender or creditor

• Ask to speak with the hardship department. This is a dedicated customer support team which specialises in helping people experiencing financial difficulty.
• Tell them how you have been affected by the pandemic.
• Tell them if you are receiving the Pandemic Leave Disaster Payment, JobSeeker payment or other government support.
• Ask them about what hardship assistance options they are offering. If you have energy, water, rates or telecommunications bills you are struggling to pay, see our page, COVID-19 utilities, telcos and rates, about what assistance and options are available to you.  For example:  Ask about any discounts, government rebates or other assistance you may be eligible for, such as state-based utility vouchers (electricity, gas and water).
• If you have multiple forms of credit (credit card, personal loan, car loan, etc) with the same lender or creditor, one option may be to restructure or consolidate them and/or switch to interest only repayments.
• Consider how much time you will need the repayment arrangement to be in place, for example, 3 months, 6 months, 12 months.  Usually, the longer the arrangement the more information your lender or creditor may need from you.
• Only agree to repayments you can afford. You can always make higher repayments if your circumstances improve while you are still in a repayment arrangement.
• Agree the timing of the repayments, for example, if you are paid fortnightly then you could schedule your repayments to be fortnightly as well.
• Negotiate the highest repayments you can afford on your highest priority debts (home loan and utilities or possibly a car loan), so that you don’t fall too far behind.
• Defer or make lower payments on low priority debts (for example, credit cards) if you are in financial hardship and you need to pay higher priority debts.
• If negotiating a hardship arrangement is taking some time, keep making repayments you can afford in the meantime.

What to ask for when you negotiate a repayment arrangement

Try to negotiate the following as part of any agreed repayment arrangement:

• Affordable repayments
• Late fees and default/legal fees not to be charged
• To deal with any arrears by extending the term of the loan (people usually do not exit financial hardship with money for higher repayments)
• A reduction in the interest rate or a stop in interest charges for a length of time (this is more likely to work for credit cards)
• Ask that your credit report is not affected and no default is listed while you keep to any agreed repayment arrangement
• Do discuss that any repayment arrangement may need to be reviewed and extended as it is unknown when you can return to making the normal repayments (for example, because you are unemployed)
• Ask for confirmation of any agreement in writing, particularly if it is for three months or longer.

If your lender or creditor will not agree to a repayment arrangement

If your lender or creditor will not agree, or is not being reasonable with your request for hardship assistance, call and speak to one of our financial counsellors on 1800 007 007 for advice.

If you don’t get an appropriate outcome from your lender or creditor, you can have that decision reviewed.  For most lenders and creditors, you have the right to lodge a complaint with the organisation’s External Dispute Resolution Scheme – also known as the ‘Ombudsman’. The Ombudsmen schemes are free, independent and very approachable; it’s easy to give them a call to discuss your issue.

For more information about external dispute resolution and how to lodge complaints, see our Complaints and disputes page.