What is financial hardship and what are your rights?

You are in financial hardship if you have difficulty paying your bills and repayments on your loans and debts when they are due. Under credit law you have rights when you are in financial hardship.

This page explains your rights and obligations under the law.

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There are often two main reasons for financial hardship: 1. You could afford the loan when it was obtained but a change of circumstances has meant you can no longer afford the repayments; or 2. You could not afford to repay the loan when it was obtained. If this is the case, get legal advice immediately.

If you are behind with your loan or lease repayments, it can be stressful. For loans and leases for personal purposes (where the credit law applies), you have certain rights to ask for a financial hardship repayment arrangement.

The creditor is required to respond to your request and be reasonable about making a repayment arrangement.

How to negotiate a repayment plan with your creditor


Work out what you can afford to pay

If you’re struggling to pay back money you owe, the first thing to do is to work out what you can actually afford to pay by doing a simple budget. How to work out what you can afford to pay.

If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.

If you can’t afford to pay anything
Call us on 1800 007 007 straight away for advice.


Contact your creditor

You can call, write to or email the creditor letting it know you cannot afford your repayments and that you want to make a repayment arrangement. If possible, contact your creditor’s hardship department. This is called a hardship notice.

When you give a hardship notice (for the first time in any three-month period) the lender must stop further enforcement or legal action until it responds. This requirement does not apply if the creditorhas a court judgment.

Your creditor can ask you for more information. The information must be relevant. Information that is relevant would include:

  • Details of your income
  • Details of your expenses
  • The cause of your financial hardship (and evidence of the cause if available, for example, a medical certificate)


  • Keep details of how and when you told the creditor you were in financial hardship
  • You must be having (or will have) trouble making your loan repayments because of reasonable cause (such as an illness or unemployment). There are many reasonable causes.
  • You must be able to reasonably repay the loan if the variation is granted.
  • You can ask for any type of repayment arrangement as long as it will reasonably repay the loan. For example, it could be a short-term reduction in repayments or a permanent change in repayments.
  • You can request financial hardship even if the co–borrower does not agree or cannot be contacted.

Sample letter/email to request a repayment arrangement under the credit law


The creditor must respond

The creditor must respond to your request for a repayment arrangement. The creditor has between 21 and 30 days to respond, depending on whether it asks you to provide further information.

You should continue to pay whatever you can afford during negotiations.

Possible responses

If the creditor agrees to the repayment arrangement you offer, then your contract has been varied.

If the creditor says no to a repayment arrangement you offer, then it must:


If you make a repayment arrangement stick to it

If your creditor agrees to a repayment arrangement do your best to stick to the repayments.

  • Make the agreed repayments on the agreed date
  • If you are struggling to make the repayments contact your creditor again to talk about your options
  • If it is taking longer than you hoped to get back to making the scheduled repayments, talk to your creditor about extending the arrangement


What to do if you can’t agree

If the creditor will not agree to a repayment arrangement you have the following options:

  • Keep negotiating with the creditor
  • Lodge a dispute in the Australian Financial Complaints Authority. It is a free service that can review the decision of the creditor and make a decision. You do not have to accept the decision. If you do accept it, the decision is binding on the creditor.
  • Go to court. Get legal advice if you want to consider this option.


What happens to my credit report?

When you are behind in repayments, your credit report may be affected. There are two ways your credit report might be affected:

  • A default being recorded
  • Repayment history information being recorded

default can only be listed on your credit report if:

  • You are in default (have missed repayments)
  • A default notice has been sent to you giving you at least 30 days to pay the default
  • A notice of intention to list the default on your credit file has been sent to you.

The creditor cannot list a default when you have asked for a repayment arrangement. The creditor can only list a default 14 days after it has rejected your request for an arrangement.

You are not in default if you are in an agreed repayment arrangement. So, the quicker you make an agreed repayment arrangement (and stick to it), the less likely that a default will be listed on your credit report.

Repayment history information (RHI) is information about whether you make your loan repayments each month.

If you are up to date the payment is listed as “0”. Once you miss a loan repayment you have 14 days to catch up. After 14 days your credit report will note that you have missed one repayment. If you keep missing repayments, your credit report keeps recording the number of monthly missed repayments.

There is no requirement to give you notice that repayment history information will be listed on your credit report.

If you make a repayment arrangement (and keep to it), the RHI should reset to 0. Unfortunately, there is a lot of argument between industry and consumer advocates as to how and when the RHI should reset to 0. Further clarification is expected soon.

If your credit report lists missing repayments on your RHI but you had made an agreed repayment arrangement, consider disputing the listing with the Australian Financial Complaints Authority.


What if I am not eligible for a hardship variation under the credit law?

You should still contact the creditor and explain your situation.

  • Ask for a reduction in (or postponement of) your repayments for period of time.
  • If the creditor agrees, confirm the agreement in writing. Keep a copy of the letter.
  • If the creditor will not agree, you should keep making some of your repayments (if you can) and get advice from a financial counsellor.
  • If the creditor will not agree you can also lodge a complaint with the external dispute resolution scheme your creditor is a member. See our Complaints and Disputes page for more information about how to make a complaint with an external dispute resolution scheme.
  • If court proceedings have commenced, you must get legal advice immediately.


Speak to one of our financial counsellors

If you’re feeling overwhelmed and need some help to deal with your financial hardship, you can speak with one of our financial counsellors.

Financial counsellors aren’t judgmental about your circumstances – they’re here to offer you free, confidential and independent advice and assistance.

To speak to a financial counsellor you can:

  • Call the National Debt Helpline on 1800 007 007 – open Weekdays from 9:30 am to 4:30 pm.
  • Use our live chat service by clicking the chat icon in the bottom right corner of your screen. Live chat is available 9:00 am to 8.00 pm weekdays. If you send a message outside these hours a financial counsellor will get back to you.
  • Make an appointment to see a financial counsellor in your local area – Find a local Financial Counsellor.


While you have rights, it’s important to be aware that your creditors also have rights under the law. These rights allow your creditor to pursue you for money you owe them. Read more about creditors’ rights on the Debt collection page.

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