Asking a lender for hardship help

What counts as hardship

Moneysmart defines financial hardship as being unable to make a credit or loan repayment, and hardship assistance as an arrangement with the lender to alter repayments or set up a payment plan. AFCA lists sickness, natural disaster, unemployment and over-commitment to credit among the causes. Moneysmart reports more than 280,000 hardship notices across Australia in the 2024/25 financial year.

The National Debt Helpline explains that where the credit law applies, which includes loans and leases taken out for personal purposes, you have the right to ask for a hardship repayment arrangement, and the creditor is required to respond and be reasonable about making one. The National Credit Code also covers credit that a lender provides in the course of its business, for a charge, to an individual (or a strata corporation) wholly or mainly to buy, renovate or improve residential property as an investment, or to refinance such credit, so the right to ask can reach those loans too. AFCA notes that a small business does not get the same hardship rights an individual borrower has.

This matters for consolidation. The Helpline says someone already in hardship usually cannot get a loan to consolidate, and that agreements with existing lenders usually leave people better off, because refinancing costs money.

How a request runs, step by step

1. Before the call

   Working out what can be paid

   The Helpline’s first step is a simple budget to work out what can actually be afforded. Then it gives two branches. If something can be paid, start paying that amount and contact the creditor straight away to put a repayment agreement in place. If nothing can be paid, call the National Debt Helpline on 1800 007 007 straight away for advice; its phone line is open Monday to Friday, 9.30 am to 4.30 pm. Moneysmart has a budget planner for this.

2. The request

   Contacting the hardship team

   Moneysmart says the first step is the lender’s hardship team, found by searching “hardship” on the lender’s website, and that it can be reached by phone, email or chat. The Helpline calls telling a creditor you cannot afford the repayments and want an arrangement a hardship notice. Under the National Credit Code you can give one by phone or in writing. The Code then limits what the lender can do next. If it has to send you a default notice before enforcing the loan, and in the 4 months before your hardship notice you had not given it another one (or it reasonably believes this one rests on a materially different reason), it must not start enforcement proceedings until it has given you its notice that the two of you have not agreed to change the contract and 14 days, counted from the day it gives you that notice, have passed. This applies whether your hardship notice comes before or after the default notice. The rule has one exception: the lender can still take possession of goods the loan is secured on if it reasonably believes you have moved or sold them, or mean to, without its permission, or that urgent action is needed to protect them.

   The lender may ask why help is needed, about income and major expenses such as other loans, and what repayments can be afforded. Moneysmart says lenders won’t ask for your life story. The Helpline suggests keeping a record of each contact: the date, the time and what was said.

3. 21 days or longer

   The lender replies

   Under the National Credit Code the lender must give you a notice of its decision. If it asks for nothing more, the notice is due within 21 days of your hardship notice. It can instead ask, within those 21 days, for information you then have 21 days to give; the notice is then due 21 days after it gets that information, or 28 days after the date on its request if nothing arrives. The notice either records that you have agreed to change the contract, or says you have not agreed, why, and how to contact AFCA and what your rights there are. If what you agree is a deferral or reduction of your repayments lasting no more than 90 days, the Code does not require the notice. The Helpline also suggests continuing to pay whatever can be afforded during negotiations.

4. After agreeing

   Keeping to the arrangement

   Moneysmart says to agree only to an amount that can be paid. If the arrangement stops being workable, it suggests telling the lender straight away, paying what you can, and negotiating a new arrangement. The Helpline suggests getting the agreed plan confirmed in writing.

5. If you cannot agree

   Taking it to AFCA

   AFCA says that if a hardship arrangement cannot be agreed, a complaint can be made to AFCA, and that making a complaint is free. AFCA’s own Rules (the version in force from 8 October 2026, rule A.7) set the limits: while AFCA is considering your complaint, the lender must not start court action against you about it, and must not press a debt recovery case it began before you complained beyond the minimum needed to protect its legal rights. It also must not take any step to recover the debt (including enforcing a default judgment), protect the assets securing it, sell or pass on its right to recover it, or list a default on your credit file. AFCA’s Operational Guidelines add that these limits start when you submit the complaint, not when the lender hears of it. With AFCA’s consent, and on any conditions it sets, the lender may still start a court case if its time to sue is about to run out (going no further than needed to keep the case alive), treat your complaint as a test case, freeze, preserve or sell assets the complaint is about, carry on a case in which you have done more than file a defence (or a defence and counterclaim), or enforce a default judgment.

What an arrangement can look like

The National Debt Helpline describes the options a creditor may agree to:

Temporarily stopping payments

Often called a moratorium, deferral or repayment holiday. No repayments are made for the period, and how the missed payments will be paid has to be agreed with the creditor.

Changing repayments

Reduced for a time and then back to normal, reduced for a time and caught up later, or permanently reduced and repaid over a longer period.

A lump sum

An offer to settle the debt for less than is owed, in full and final settlement.

A debt waiver

In certain circumstances a creditor may waive a debt, for example where the only assets are basic household goods or a low-value car.

Freezing interest and fees

Interest and fees held at 0% to make repayments smaller, often alongside a deferral.

What AFCA can look at

AFCA lists the kinds of hardship complaint it can consider:

• A declined request. The firm declines and either makes no alternative offer or gives no reasons.
• Default notices. The firm sends a default notice while you are in hardship, whether or not you have asked for help.
• No response. The firm does not respond. AFCA says the request does not have to be formal: any contact asking for assistance can count.
• Enforcement continuing. The firm keeps trying to recover the debt after a hardship request, including through legal proceedings or debt collectors.
• A default judgment. In specific circumstances, where a firm has declined help repaying a judgment debt.

When a complaint arrives, AFCA sends the details to the firm and encourages it to make contact quickly; if no agreement is reached, a case worker from its financial hardship team investigates, and AFCA can make a final decision.

What it does to a credit report

Moneysmart says a financial hardship arrangement does not affect your credit score. The report shows that an arrangement is in place, only for the months it applies, and the listing is deleted after 12 months. Arrangements with buy now pay later, phone, internet or utility providers do not appear at all.

The OAIC says a lender cannot list a default on your credit report while it is deciding a hardship request, or until 14 days after it tells you it has refused, unless it reasonably believes you asked on the same basis as a hardship request you made in the previous 4 months. More in your credit report.

Help with the conversation

A financial counsellor can help with a hardship application, and can negotiate with creditors directly. Moneysmart lists the National Debt Helpline for this.