By the Debt Negotiators team · Last updated 4 November 2026
If you can’t keep up with a loan, credit card or bill, you have options. Australian law gives you the right to tell your lender you’re in financial hardship and ask them to change your repayments. Energy retailers and phone companies also have rules about helping customers who are struggling to pay. This guide explains what counts as financial hardship, how to ask for help, what a lender can change, what shows on your credit report, and what to do if the answer is no. It’s general information, not personal advice.
Free help exists too: the National Debt Helpline on 1800 007 007.
What counts as financial hardship?
Financial hardship is when you’re unable to make a credit or loan repayment. It usually follows a change you didn’t plan for, such as illness that stops you earning, losing your job, a family breakdown or unexpected expenses.
Those examples come from the Financial Rights Legal Centre, but there’s no fixed list. It’s worth acting early, because Moneysmart notes that the earlier you seek help, the more options you’ll have.
Hardship can be short or long term. Your lender will want to know which, because a temporary arrangement, like deferring a payment, is different from a permanent one, like varying the loan.
Do you have a legal right to ask for hardship help?
Yes. Under section 72 of the National Credit Code, you can give your lender a hardship notice telling them you can’t meet your obligations under a credit contract, and you can give it verbally or in writing.
A borrower or a guarantor can give a hardship notice. These rights apply to consumer credit. Business loans are not protected by the National Credit Code, though you can still ask a business lender for help.
How long does a lender have to respond to a hardship notice?
If your lender has enough information, it has 21 days to tell you its decision, counted from the day after it receives your hardship notice. If it needs more information, it must ask within 21 days, then respond within 21 days of getting your information, or within 28 days of its request if you don’t send anything.
If the lender says no, it must give you a notice that says it doesn’t agree to change the contract, explains why, and gives contact details for the Australian Financial Complaints Authority (AFCA) along with your right to complain to it. If it agrees to a change that defers or reduces your obligations for more than 90 days, it must give you written notice of the changes no later than 30 days after the agreement.
How do you make a financial hardship application?
Contact your lender’s hardship team by phone, email or online chat, say you’re experiencing financial hardship, and explain why. Tell them what change you want, what repayments you can afford, and how you plan to get back to normal repayments.
A clear financial hardship application usually covers:
- your account name and number, and the amount you pay each fortnight or month
- the reason you’re in hardship
- your current income and major expenses, including other loans
- the specific change you’re asking for, such as lower repayments for three months
- what you can afford to pay (only offer an amount you can keep up)
- your plan for going back to normal repayments.
Keep a copy of every letter, email, text or chat, and make notes of what’s said on the phone. Write down the date you made the request so you can track the 21-day timeframe.
If you owe several lenders, work out your whole budget before you call anyone, so you don’t promise one lender money you need for another. Our guide on how to get out of debt has more on building a plan.
What can a lender change in a hardship variation?
A hardship variation is a change to the terms of your loan, because of financial hardship, to make it easier to manage. Depending on your situation, a lender might postpone or reduce your repayments for a few months, reduce or freeze the interest rate, extend the loan term, waive default or penalty fees, or give you time to sell an asset.
A lender doesn’t have to agree to what you ask for, but it must give reasons if it refuses. Every option also has a catch, so check what you’re agreeing to before you say yes.
| What a lender might offer | How it helps | The trade-off |
|---|---|---|
| Postpone repayments for a few months | You get breathing room while things settle | The debt doesn’t go away. Ask how the missed amounts will be repaid and whether interest is still charged. |
| Reduce repayments for a few months | Lower payments while you recover | Your balance falls more slowly. Ask the same questions as for a pause. |
| Reduce or freeze the interest rate for a few months | Less interest is added for a while | It’s temporary. Find out when the normal rate comes back. |
| Extend the loan term | Smaller repayments spread over a longer time | A longer term can lower repayments but could increase the total cost. |
| Waive default or penalty fees | Removes extra charges added because you fell behind | It doesn’t reduce what you owe on the loan itself. |
| Time to sell an asset | The lender holds off while you sell | You lose the asset, such as a car or your home. |
For a home loan, Moneysmart says that if your circumstances are unlikely to improve, you may be better off selling, and that it’s better to sell your home yourself than have a lender take possession and sell it.
Will a hardship arrangement show on your credit report?
Yes. Since 1 July 2022, a hardship arrangement shows on your credit report as a sign against your repayment history, but it doesn’t show the reason, it can’t be used to calculate your credit score, and it’s removed after about a year.
The Office of the Australian Information Commissioner explains how the signs work:
- Temporary arrangement: marked “A” against each repayment during the arrangement. All signs are removed one year after the arrangement’s final repayment.
- Permanent arrangement (a variation): marked “V” against the first repayment under the new terms. The sign is removed one year after the arrangement started.
A hardship arrangement doesn’t wipe late payments already reported before you contacted your lender. Those remain on your credit report for 2 years from the time of listing, which is another reason to ask early. You can check your credit file for free to see what’s been reported.
Can you get hardship help with energy, phone and internet bills?
Yes. Under the National Energy Retail Law, energy retailers must assist customers who are having payment difficulties, and phone and internet providers must follow the Telecommunications (Financial Hardship) Industry Standard 2024.
Energy. Ask for your retailer’s hardship team. A payment plan lets you pay back small amounts regularly, for example every 2 weeks. To use a hardship program, your retailer will need to know more about your finances. Your retailer must also help you work out whether you’re eligible for government rebates or concessions, and if you get a Centrelink payment it must let you pay through Centrepay. Your retailer can’t cut off your power if you keep up with your payments, but it can if you don’t. If you can’t sort it out with the retailer, contact your local energy ombudsman. In NSW that’s the Energy and Water Ombudsman NSW (EWON), a free and independent complaints service.
Phone and internet. Since 29 March 2024, telcos must offer more tailored assistance to people who struggle to pay, proactively identify customers who may be in hardship, and give hardship information and referrals. If your provider’s offer isn’t in line with the Standard, the Telecommunications Industry Ombudsman may treat your complaint as urgent.
What can you do if the lender says no?
Make a formal complaint to the lender first, and if that doesn’t fix it, take it to AFCA, which is free. If you’ve already asked for hardship help and been refused or ignored, you can go straight to AFCA once the National Credit Code timeframes have passed.
A formal complaint (called internal dispute resolution) is best made in writing. Put “complaint” in the subject line and include your contact details, the date, a clear explanation and copies of relevant documents. Under ASIC’s complaint rules, lenders must treat hardship complaints as urgent and generally respond within 21 calendar days. For most other complaints, the limit is 30 calendar days.
You can contact AFCA on 1800 931 678 or online. While AFCA looks into your complaint, the lender generally can’t take legal action against you.
Where can you get free help first?
Call the National Debt Helpline on 1800 007 007 to speak with a free, confidential financial counsellor. Counsellors don’t lend money or sell you anything, and they can help you work out what you can afford and negotiate a payment plan.
The National Debt Helpline takes calls on weekdays from 9:30am to 4:30pm, and live chat runs on weekdays from 9am to 8pm.
When might a paid service like Debt Negotiators fit?
A paid service may suit you if you’re dealing with several creditors and want someone to negotiate with them on your behalf. Debt Negotiators is a fee-based service, so it’s worth trying the free options above first and weighing up the cost.
We can help set up informal arrangements with your creditors. Creditors don’t have to accept any proposal, and we can’t promise a result. If hardship help isn’t enough, our debt solutions comparison sets out each option side by side with its downsides, including formal options like a debt agreement, which has serious consequences you should understand first.
If you’d like to see which options might fit your situation, answer 9 quick questions or call 1300 351 008. Debt Negotiators is a fee-based service.
Frequently asked questions
Do I have to put my hardship request in writing?
No. A hardship notice can be given verbally or in writing. Writing is easier to prove, so if you call, follow up with an email and keep notes of the conversation.
Will asking for hardship help lower my credit score?
Financial hardship information can’t be used to calculate your credit score. Your report will show a hardship sign for about a year, but not the reason for it.
What if I can’t keep to my new arrangement?
Tell your lender straight away. Moneysmart suggests you keep paying what you can, even if it’s less than you agreed, and negotiate a new arrangement you can afford.
Can I get hardship help on a business loan?
Business loans are not protected by the National Credit Code, so the hardship notice rules don’t apply. You can still ask your lender, and a financial counsellor can help you prepare.
Can a lender sue me while AFCA reviews my complaint?
Generally not. A lender usually can’t take legal action against you while AFCA looks into your complaint. AFCA is free to use.
