Car Accident Debt

If you’ve had a car accident, are at fault, and aren’t insured, the other party’s insurance company may demand payment for their loss – and that could be a lot of money.

Insurance companies are obliged to act fairly and to consider flexible payment arrangements, especially if you’re in financial difficulty.

If you’re having issues with a car accident debt, follow these steps.

Steps to take to sort out a car accident debt


Seek legal advice if you’re not sure whether you’re responsible for the damage

If you’re not sure you’re responsible, don’t admit liability. Get legal advice immediately.

If you have had a car accident but don’t know what to do next, the Motor Vehicle Accident Problem Solver is an interactive tool with step-by-step guides to help you plan your next move.


Make sure the amount being claimed is reasonable

If you accept that you’re responsible, you still need to be satisfied that the amount being claimed is reasonable. Ask the insurance company or debt collector for copies of:

  1. Repair invoices
  2. Any towing costs (if claimed)
  3. Detailed invoices for hire car costs (if claimed)

The insurance company isn’t obliged to get more than one quote, let you choose a repairer, or find the lowest quote. The repair costs only need to be reasonable.

If you want to dispute the amount claimed, write to the insurance company or debt collector setting out your reasons why.

Only continue to the next steps if you’re satisfied with the amount being claimed from you.


Contact the insurance company or debt collector

If you accept responsibility and are satisfied with the amount being claimed, contact the insurance company or debt collector that’s claiming the money from you.

If you can pay or almost pay, you can often negotiate a discount on the amount claimed. Make sure that if you do negotiate a reduced lump sum settlement, you clearly state and confirm that the payment is in “full and final settlement”.

If you can’t pay, tell the insurance company or debt collector that you’re in financial hardship. The insurance company and debt collector have obligations under the General Insurance Code of Practiceto consider reasonable repayment arrangements. You need to be prepared to provide reasonable information about your financial situation if requested.

Possible arrangements are:

  • an affordable payment plan
  • extra time to pay the amount
  • a reduced lump sum
  • a debt waiver (This may only be possible if you can show you can’t pay the debt in the foreseeable future.  Usually this is because you’re receiving a Centrelink income, have no significant assets and this situation is unlikely to change.)



Speak to one of our financial counsellors

If your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.

What happens if?

I don't pay

If you don’t pay, the insurance company can take you to court and enforce the judgment. If the court makes a judgment and you still don’t pay, the debt may have interest added.

I go bankrupt

In most cases, car accident debt will be wiped out by bankruptcy – but make sure the accident is ‘liquidated’ first! This means the insurer must have issued you with a bill for a specific amount, you must have accepted liability for the debt, and this should be in writing.

It may be desirable to declare bankruptcy on a car accident debt to give yourself a fresh start, but it’s worth considering other options first. Please contact us on 1800 007 007 and speak with one of our financial counsellors before going down this path.



Insurance companies that have signed the General Insurance Code of Practice (GICP) are obliged to act fairly and in a considerate manner towards you.

If an insurer has signed the General Insurance Code of Practice, then they must consider flexible payment arrangements if you’re experiencing financial difficulty because of illness, unemployment or other reasonable cause.


Start typing and press Enter to search